2013 ANNU AL REPOR T 201 ANNUAL 3 REPORT

Transcription

1 2013 ANNUAL REPORT

2 Cover photo Henriët Veldkamp, Executive Secretary Corporate Projects, USG People Pedro Okken, Operational Manager, ASA

3 ANNUAL REPORT 2013 FORWARD-LOOKING STATEMENT This annual report contains certain forward-looking statements regarding the financial situation and results of USG People N.V., as well as a number of associated plans and objectives. Forward-looking statements by their nature can provide no guarantee for the future. As a result of various factors actual results may differ from current expectations. These factors may include changes in tax rates, mergers and acquisitions, economic developments and changes in labour legislation. The forward-looking statements in this annual report are current at the time the report was adopted and provide no guarantees for the future. The annual report is available in Dutch and English. In the event of ambiguities, the Dutch text shall prevail.

4 IN 2013 USG PEOPLE UNITED ITS OPERATIONS IN FOUR INTERNATIONAL STAR BRANDS: START PEOPLE, UNIQUE, SECRETARY PLUS AND USG PROFESSIONALS Each and every day around 90,000 people are employed via USG People at companies and institutions in continental Europe. This makes USG People one of the largest HR services providers in Europe, with its activities mainly focused on the Netherlands, Belgium, Germany and France. USG People achieved revenue of 2.3 billion euros in The current organisation, with its staff of around 6,000, originates from Unique Uitzendburo which was established in the Netherlands in USG People has been listed on the stock market since 1997 and the organisation has since grown through organic growth and acquisitions, including the acquisition of Start Holding in Netherlands in 2002 and Solvus Resource Group in Belgium in USG People s second home market (after the Netherlands) is Belgium, where the organisation has been active since USG People is the second largest HR services provider in the Dutch and Belgian markets in terms of revenue. In 2013 USG People united its operations in four international star brands: Start People, Unique, Secretary Plus and USG Professionals.

5 2013 FOCUS USG People sharpens its focus by divesting the general staffing activities in six countries and uniting its brands in four star brands: Start People, Unique, Secretary Plus and USG Professionals ACQUISITION OF ALLGEIER DL In 2008 USG People strengthens its position in Germany with the acquisition of Allgeier DL s staffing activities STOCK MARKET LISTING The acquisition of Goudsmit, a listed company, means that Unique International becomes listed on the Amsterdam stock exchange. This results not only in increased name awareness but also in the opportunity to invest more in the company s scale, services and efforts to create an international network THE BEGINNINGS On 11 December 1972 Alex Mulder founds Unique Uitzendburo. The company s first employees and candidates come up with the company name ACQUISITION OF SECRETARY PLUS In 2001 the specialist activities are expanded with the acquisition of Secretary Plus. That very same year Unique International changes its name to United Services Group ACQUISITION OF START In 2002 United Services Group acquires staffing organisation Start, expanding the group s general staffing activities in the Netherlands, Spain and Italy. In 2002 group revenue exceeds 1 billion ACQUISITION OF SOLVUS Belgian peer Solvus Resource Group is acquired in 2005, after which the combined entity operates under the current name of USG People N.V. USG PEOPLE 003

6 CREATED VALUE IN 2013 development in 2013 supervision financial reporting OUR RIGHT TO EXIST social relevance added value stakeholders OUR ROADMAP AND GOVERNANCE strategy corporate governance OUR BELIEF AND CULTURE mission and vision business principles INTRODUCTION AND GUIDE This is USG People s 2013 annual report. The report is structured differently this year as we take a first step towards a more integrated annual report. The purpose is to provide a better insight into the elements and aspects that drive value creation within our organisation, that justify our existence and that generate returns for our company s different stakeholders. While anyone interested is more than welcome to read the report, its primary target group is our stakeholders. For us, stakeholders are everyone associated with our organisation who contribute to its success and justify our existence. The report is divided into four parts: our right to exist, our belief and culture, our roadmap and governance, and the value we created in This report also contains condensed information about USG People s sustainability policy. Similar to last year, a separate sustainability report has been published alongside this annual report. As from next year we will incorporate the sustainability aspects of our operations into the annual report. This is the last time that we are publishing a printed version of the annual report. As from the 2014 financial year all annual reports will only be published online.

7 005 INDEX OVERVIEW & STRATEGY CEO S PREFACE KEY FIGURES SOCIAL RELEVANCE OF OUR WORK OUR ADDED VALUE STAKEHOLDERS MISSION AND VISION BUSINESS PRINCIPLES STRATEGY CORPORATE GOVERNANCE FINANCIAL CALENDAR HIGHLIGHTS REPORTS EXECUTIVE BOARD MEMBERS PROFILES REPORT OF THE EXECUTIVE BOARD developments in our relevance to society development of our added value risk section results by segment development of financial results our financiers summary of strategic execution outlook SUPERVISORY BOARD MEMBERS PROFILES REPORT OF THE SUPERVISORY BOARD PRINCIPLE FEATURES OF THE REMUNERATION REPORT FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS 085 consolidated income statement 085 consolidated statement of comprehensive income 086 consolidated balance sheet as at 31 december 087 consolidated statement of change in shareholders' equity 088 consolidated statement of cash flows 089 notes to the consolidated financial statements 090 COMPANY FINANCIAL STATEMENTS 148 company income statement 148 company balance sheet at 31 december (before profit appropriation) 148 notes to the company income statement and balance sheet 149 OTHER DATA events after the balance sheet date 156 provisions in the articles of association regarding profit appropriation 156 profit appropriation 157 independent auditor s report 158 ADDITIONAL INFORMATION ten-year overview 162 financial glossary 164 colophon INDEX 005

8 WE LAID A NEW FOUNDATION FOR THE FUTURE, A FUTURE IN WHICH USG PEOPLE CAN GROW SUSTAINABLY

9 CEO S PREFACE In 2013 we got our organisation on track for the next stage in our development by increasing the focus in our positioning, both geographically and with respect to the services we offer. The positioning of our activities is more focused. The management and organisational structures are more effective, the links and cooperation between our brands have been intensified; and our services have become more distinct. We laid a new foundation for the future, a future in which USG People can grow sustainably. In 2013 we made changes to our organisation, in line with our 2011 strategic revision. The geographic scope of our general staffing activities has been scaled back from nine to three countries. The general staffing activities in the other six countries were sold in the first half of the year. The position of the activities is now much more focused, allowing us to use our resources more effectively to continue to grow our added value in regions where we are well-positioned. Dear stakeholders and all others interested, 2013 was not a strong year from a macro-economic perspective. There was barely any economic growth and the confidence of businesses and consumers alike was low, particularly in the first half of the year. Slowly but surely the picture improved in the course of the year. Our markets also gradually improved, which impacted our revenue favourably. The improvements first became visible at a few operating companies in the second quarter of the year. The signs became stronger and a trend of gradual recovery emerged across the board in the summer months. The turning point to growth came in the final quarter of the year. Revenue from our ongoing activities was 2.3 billion for the year and we achieved underlying EBITA of 66.5 million. In 2013 USG Professionals was launched as an overriding international brand for our high-quality HR solutions with highly qualified professionals. Our strategy is aimed at expanding the Professionals division, focusing on market segments in which we provide significant added value and can create sufficient scope. In 2013 we adjusted our positioning accordingly. The services provided by USG Energy no longer fit in the strategic scope of USG Professionals and that is why we divested it in The mix of profiles in the candidate networks of USG Professionals was also adjusted in Now that these changes have been made, USG Professionals is ready to take the step to expand and grow in select, promising market segments. OVERVIEW & STRATEGY 007

10 The start of Project United marked the final leg of the strategic transition in The project aims to strengthen competitiveness by intensifying cooperation between our brands. The brand portfolio was clustered in four star brands: Start People, Unique, Secretary Plus and USG Professionals. This makes the positioning of the brands clearer and more distinct. Each of the star brands provides distinct services in a select market segment. That way the brands can align their organisation and services optimally with the trends in their specific market segment and further grow specialist added value for their stakeholders. An important element of the United project is the simplification of the organisation. Great strides were made in this respect in The Executive Board and the corporate organisation were modified further and the senior management of the operating companies was scaled back. The project will be completed in OUR ORGANISATION IS STREAMLINED AND FOCUSED, WITH PROPOSITIONS IN FUNDAMENTALLY PROMISING MARKETS. WE ARE NOW FOCUSED ON FURTHER GROWING AND DEVELOPING OUR ADDED VALUE IN THESE MARKETS In 2013 underlying costs were reduced throughout the entire organisation. The combination of a sharper focus and a lower cost level improves the commercial effectiveness of our organisation. Throughout the year we invested in new solutions for our customers, for instance with the acquisition of Adver-Online and the implementation of Unique HROffice. These investments have development potential for our services in the entire organisation. Furthermore, in 2013 we launched a number of new initiatives within the framework of SR. In the Netherlands, for example, we launched a plan of action together with Dutch social security benefits organisation UWV aimed at helping job seekers over 55 re-enter the job force. In 2013 USG People started to participate in the internationally acclaimed Great Place to Work study. The outcome of this study is the starting point from which we want to continue to grow our organisation in specific areas of the development of our human capital was a year in which we laid a new foundation for the future. USG People can now grow in another way not only larger but also mainly stronger. Our organisation is streamlined and focused, with propositions in fundamentally promising markets. We are now focused on further growing and developing our added value in these markets. The economic cycle has a large impact on demand for our services. Once the pace of economic growth picks up, USG People will be able to benefit from the increased potential of the adjusted organisation in the near future. The organisational changes implemented in the past year have demanded a great deal of effort and an extremely flexible attitude from all our colleagues. At the same time we unfortunately had to say goodbye to many valued colleagues as a result of divestments and restructurings. I would like to thank everyone for their ongoing commitment and their contribution to the results we achieved in the past year. The dedication and professionalism of all our employees reinforce my faith in the beautiful and successful future of USG People that lies ahead. Rob Zandbergen, Chief Executive Officer 26 February 2014

11 KEY FIGURES 2012 In thousands of euros unless otherwise stated 2013 RESTATED 1) Revenue 2,270,031 2,441,954 EBITA 26,870 62,858 Operating income 41, ,206 Operating cash flow 26,186 29,037 Net income -26, ,179 Dividend 11,268 9,566 Equity attributable to equity holders of the company 458, ,924 Investments in property, plant and equipment 3,775 6,437 Investments in intangible assets 14,117 13,135 Stock market value at year-end 779, ,723 Total number of shares issued at year-end 80,483,677 79,715,875 Average number of employees (FTE) - indirect personnel 5,057 5,329 - direct personnel 54,705 58,023 Number of branches RATIOS EXPRESSED AS PERCENTAGES EBITA / revenue 1.2% 2.6% Operating income / revenue 1.8% -4.5% Net income / revenue -1.1% -7.8% Equity / total assets 38.5% 36.4% PER SHARE IN EUROS (based on average number of shares outstanding) Net income Operating cash flow Dividend Shareholders' equity 2) Share price at year-end Highest share price Lowest share price ) The divestment of the General Staffing activities and changes to IAS 19 Employee benefits resulted in a restatement of the 2012 figures 2) Based on the number of shares outstanding as at 31 December OVERVIEW & STRATEGY 009

12 SOCIAL RELEVANCE OF OUR WORK USG People helps make the supply of and demand for labour more accessible in society and aligns the two better. We interpret this task in a broader and broader sense. The result is that we contribute to healthy dynamics in the job market, thus improving the functioning of society and our economy. A better functioning job market means that more people can take part, leading to more widespread and higher participation. Providing professional support, helping develop talent, strengthening the innovative qualities of employees and developing and innovating staffing organisations for employers. This too helps minimise friction in the job market and increase opportunities for younger and older people and vulnerable groups in the job market. This is how we aim to improve the wellbeing of society at large. HIGHER CHANCE OF SUCCESS FOR ORGANISATIONS We provide companies large and small with professional assistance on many HR and job market-related issues they face. This enables them to use their staff, knowledge and capacity in a more flexible way and, in doing so, lower their risks. We help companies strengthen the innovative capabilities of their staff organisation and at the same time help develop and identify talent. Applying our services helps us contribute to a better functioning job market and therefore a better functioning economy. This is how USG People fulfils the role of motor oil in a job market that does not always run smoothly and how we help improve prosperity within society. USG People has a large and exceptional network of diverse talents seeking a suitable job or new challenge. Employers can use this network to meet their needs and organise their staff effectively, sustainably and in different ways. This enables organisations to align their staff better with actual needs. Using the right solution helps companies organise their staff in a permanent or flexible way that meets their needs. This increases their operational versatility which allows them to respond better to opportunities in the market. At the same time it reduces the risks associated with inflexible staffing organisations and ineffective labour relations. The availability of qualified people at the right time for the right job strengthens competitiveness and ultimately increases companies chances for success. MORE PEOPLE AT WORK USG People provides job seekers with a large network of potential employers. As a partner USG People helps people realise their professional ambitions and shape their careers. The extensive network of clients and the development opportunities to which USG People has access offer attractive opportunities for people to reach their full potential. USG People uses its years of expertise to help people utilise their strengths and develop their talent. This provides them with versatile and sustainable opportunities to find a satisfying job, build a successful career and develop their social status. EVERYONE AT WORK USG People is focused on people. Helping more people find a job is not limited to people who can be placed relatively easily. USG People is also increasingly helping more vulnerable people and those with fewer opportunities in the job market. This category includes people with a limitation, younger and older people, the long-term unemployed and other people who are further removed from the job market. SUSTAINABLE DEPLOYMENT Focusing on sustainable deployment is necessary to be able to provide as many people as possible with access to the job market, but also to keep people who are employed as competent and

13 better connection between labour supply and demand strong competitiveness more supply and demand for work more prosperity for people and organisations better functioning economy involved as possible. Sustainable deployment means investing in healthy, flexible, involved and competent employees who can continue to make a contribution to society, both within and outside the company. We make this a priority and also urge our clients to embrace inclusive business practice. Our policy and specific cases can be found in our sustainability report. This is how USG People contributes to both social and economic prosperity. OVERVIEW & STRATEGY 011

14 OUR ADDED VALUE USG People adds value in areas where the interests of employers, employees and society at large meet. We achieve this added value by making employers and employees more mutually accessible and by creating ties between the groups. We provide a wide range of solutions for creating well-balanced staffing relationships and organisations, focused on aspects including development, diversity and sustainability. USG People has an efficient infrastructure and large networks of organisations and candidates in numerous branches and areas of expertise. Throughout the years we have acquired extensive and thorough knowledge in the field of in the recruitment, selection and organisation of staff and we offer this knowledge to our clients and candidates to find the best solutions needed to create a staff organisation that meets their ever-changing needs in every respect. ACCESSIBILITY USG People s organisation guarantees easy access for both its employees and clients. USG People is an organisation of professionals. Experts who are familiar with the relevant trends and developments in the job market which they know in detail. They have modern technology at their disposal which helps them recruit, select and coach the right candidates through channels including the internet and social media. The branches of Start People, Unique, Secretary Plus and USG Professionals provide an excellent location from which to maintain personal contacts with candidates, which in our society increasingly takes place using the internet, telephone and social media. The branches serve as meeting places where knowledge and experience is exchanged between professionals, but also between the USG People star brands and the candidates. This connectedness makes it possible to share and apply best practices on a wide scale, thus ensuring that knowledge is kept up to date, in constant development and within the organisation. In doing so USG People is able to offer its candidates attractive opportunities to shape their careers and develop further under good conditions. Our operating companies have access to a wide and comprehensive network of candidates and organisations. Through these networks we provide companies with access to a rich wealth of human resources in a wide array of specialist areas, while providing candidates with access to attractive job opportunities. SELECTION USG People helps its clients by selecting the right candidates for assignments and vacancies. We have the capacity, expertise and resources to make matches in a wide variety of aspects and in different areas of expertise. These matches range from large volumes to extremely specialist individual placements. Selecting and matching takes place based on professional and personal considerations. But we also help our clients achieve the best possible balance in their staff base in respect of diversity, sustainable deployment, placing people further removed from the job market, and job-learning placements. SOLUTIONS USG People offers its clients a wide array of solutions for them to effectively structure their staffing organisation. These solutions include recruitment and selection, services relating to HR consultancy and management, staffing, deployment, outsourcing, payrolling, MSP, RPO, HRO, project sourcing, outplacement, career support and training. USG People s operating companies have extensive knowledge on how to create a well-functioning staffing organisation. They provide their expertise on various specific aspects, know the pros and cons of the different types

15 EMPLOYEES BRANDS TECHNOLOGY accessibility selection solutions NETWORK OF FLEX WORKERS reliable partner career support permanent job flexible job labour conditions development learning sustainable deployment hr expertise assessment selection and matching tools recruitment process online hr solutions hr consultancy hr management temping & secondment outsourcing payrolling MSP, RPO, HRO career support permanent placement CLIENT NETWORK solutions selection accessibility BRANCHES SHARED SERVICE CENTERS of contracts available, and are familiar with the possibilities and limitations of applicable laws and regulations. This helps our clients compose the most effective staffing base as possible within their own scope and needs, one that meets the highest demands in the field of quality and flexibility. This decreases and lowers the risks and costs associated with ineffectiveness and inflexibility. OVERVIEW & STRATEGY 013

16 revenue employees branches countries market segment strategy 1,354 direct 61, indirect 2,708 the Netherlands Belgium France General Staffing operational excellence Local brands ASA Call-IT USG Restart Vakcollege revenue employees branches countries market segment strategy 682 direct 22, indirect 1,662 Local brands Creyf s Technicum Express Medical Receptel the Netherlands Belgium Germany Specialist Staffing SMEs and specialist placements at large organisations product leadership

17 revenue 151 employees direct 1,875 indirect STAR BRANDS IN EUROPE branches 38 countries the Netherlands Belgium France Germany Austria Switzerland Luxembourg market segment Professionals Highly educated profiles in 7 specialist areas: engineering ICT legal finance HR science and marketing communication and sales strategy customer intimacy Start People Unique Secretary Plus USG Professionals revenue employees branches countries market segment strategy 67 direct 1, indirect 218 the Netherlands Belgium France Germany Austria Switzerland Italy Specialist Staffing High-value, innovative management support thought leadership OVERVIEW & STRATEGY 015

18 STAKEHOLDERS USG People aims to strike a good balance between the possibly divergent objectives of the company s various stakeholders, and well-balanced value creation in the short and long term. The board promotes the interests of all the company s stakeholders, as well as the interests of the general public. The basic principle in this respect is value creation for all stakeholders that is both economically sustainable and socially responsible. USG People organises stakeholder dialogue on a regular basis, to discuss a wide array of topics and developments in the job market with a diverse group of stakeholders. This dialogue ensures that USG People is able to respond even quicker and more effectively to needs and developments from the different stakeholders and if necessary adjust its business model accordingly. USG People is convinced that maintaining good relations with all the company s stakeholders is crucial as it means that all stakeholders can benefit from their involvement with our organisation in a fair way. The main USG People stakeholders are our employees, our business partners (clients, flex workers, suppliers, government), our financiers (shareholders, bond holders, banks) society and the environment. OUR FINANCIERS SOCIETY AND THE ENVIRONMENT OUR EMPLOYEES OUR BUSINESS PARTNERS

19 organisation-wide - business principles - onboarding - leadership development & talent management - performance management & succession management - talent retention - recruitment senior en middle management integrated programme structure for advancement and succession of senior and middle management OUR EMPLOYEES The success of USG People depends on the know-how, vitality and performance of our employees. USG People is about people. After all, the efforts and competencies of the individual employees as well as the connection between employees and the way that they work together, determine to large extent results, development and the growth of the business. It is in this belief that we constantly invest in being a good employer and learning, development, attrition, vitality and health play a large role in this. The Great Place to Work survey measures numerous aspects related to this. Investments in the field of learning and development are focused on training, talent management, management development and succession planning. USG People offers its employees a stimulating work environment and facilitates their development. This provides employees at all units and layers of the organisation with possibilities to develop their talent. Our human resources policy and processes are aimed at facilitating this as best as possible. SENIOR MANAGEMENT USG People applies a centralised HR policy to senior management throughout the organisation. Organisation-wide frameworks are in place at a tactical and organisational level, frameworks with regard to USG People s business principles and job-specific competencies, performance management and potential analyses that together are the basis for assessing employee potential and specifying learning and talent management opportunities, if desirable focused on a specific brand. OVERVIEW & STRATEGY 017

20 RECRUITMENT USG People s business principles and job-specific competencies serve as a guideline when recruiting new employees. USG People hires employees with the right skills and competencies who are a good fit in our culture. USG People aims to hire employees not only for a certain position but also for a career in our company. ONBOARDING It is a known fact that involved, passionate and motivated employees perform considerably better than those who are not. All new employees follow an onboarding programme focused largely on our ambitions, strategy, values and culture, the corporate policy of USG People and the brand-specific demands placed on the employee. LEADERSHIP AND TALENT MANAGEMENT USG People aims to achieve a leadership style based on trust and responsibility with scope for personal leadership, whereby the strategy is put into practice and leads to results. Performance management and potential analyses form the basis of USG People s leadership and talent programmes. USG People s talent development programmes are focused not only on strengthening the leadership but also on promoting personal development in the position and career. USG People implements an integrated programme approach for the development of senior and middle management in order to promote the advancement to key positions in senior management. USG People works closely with the Vlerick Business School in Antwerp on this management development programme. PERFORMANCE MANAGEMENT Each USG People employee participates in the performance management process according to a standard cycle. Specific competencies are defined for each position. Targets are subsequently set in consultation with the employee both with respect to competency development and business results. The results are then assessed and weighed at the end of the cycle. This weighting is a main source of input for the talent review process and is the basis of variable remuneration. TALENT RETENTION USG People has set up its talent review process in such a way that at least 80% of the senior management vacancies will ultimately be able to be filled from within the company s own talent pool. OUR BUSINESS PARTNERS USG People considers its business partners to be 'partners in development'. They contribute to our development and USG People contributes to their development. Our most involved business partners are our clients, our flex workers (in the widest sense, i.e. including self-employed people with no staff), our suppliers, our co-suppliers and different government institutions. In its relations with these partners USG People aims to achieve high-quality services while focusing on working together. CLIENTS In helping our clients arrange their human resources better, USG People provides the following benefits: access to a large network of candidates; recruitment and selection tools to help find the right candidate for vacancies; flexibility in the staff base, making the organisation more versatile; reduced risks by removing or lowering capacity problems; lower costs by adopting an efficient HR organisation; advice on diversifying the workplace and devising solutions to achieve an inclusive organisation, focusing on Social Return On Investment (SROI) and people further removed from the job market; vital and sustainably employable flex workers. USG People provides its clients with a wide range of solutions to set up their HR organisation effectively, for example in the field of: recruitment and selection HR advisory and management placement, deployment outsourcing payrolling MSP, RPO, HRO project sourcing outplacement career advice and support training FLEX WORKERS USG People provides flex workers with a link to the job market. As a partner we help people achieve their professional ambitions and shape their careers. We offer flex workers attractive opportunities to shape their careers under good conditions and to further their professional development. Our extensive network of clients and the development opportunities which USG People has access to offer attractive opportunities for people to achieve their full potential. USG People uses its years of expertise to help people do what they do best and develop their talent. This provides them

21 with versatile and sustainable opportunities for a satisfying job, successful career and developing their social status. USG People is focused on people. Helping more people find a job is not limited to people who can be placed relatively easily. USG People is also increasingly helping more vulnerable people and those with fewer opportunities in the job market. This category includes people with a limitation, younger and older people, the long-term unemployed and other people who are further removed from the job market. HISTORY OF ISSUES ORDINARY SHARES 2002: acquisition of Start 43 million 2005: acquisition of Solvus Resource Group 230 million 2010: post-acquisition of Allgeier 86 million CONVERTIBLE BOND : acquisition of Solvus Resource Group 115 million SUPPLIERS The products and services that are provided by our suppliers are resources that we use in our business activities and in the services we provide to our clients and candidates. The constant development of these products and services also contributes to the possibilities for USG People to further develop its organisation and services. A basic condition in relations with suppliers is that there is a good balance between quality, competitive pricing and sustainable product development. USG People s policy for suppliers is a policy in which partners should contribute to added value, continuity and the sustainability of our services. Open and honest communication about social and environmental aspects is important, while keeping an eye on the chain behind the product or service. Environmental aspects are about looking at the impact of the product, service or activity on the environment. Social aspects are about labour conditions and SROI. OTHER STAKEHOLDERS The government, unions and industry organisations are to a certain extent also stakeholders in USG People. These authorities influence the frameworks within the job market, each with its own interests. A well-functioning job market is in the interest of all these organisations. As an employer and an HR services provider USG People aims to be closely involved with these interest groups to also be able to perform its motor oil function with these stakeholders. OUR FINANCIERS To reimburse shareholders for their capital investment USG People aims to achieve a return that reflects their investment risk. USG People is committed to transparent communication towards investors, and always aims to provide a clear and up-todate picture of developments in the company. This helps investors make founded projections for expected risks and returns. Shareholder returns are visible in the form of a company dividend and through the development of the share price on the stock exchange. The latter is partly determined by investor supply and demand, which in turn is sometimes determined by market sentiments which USG People does not directly influence, such as global economic conditions. USG People is focused on maintaining continuity and the company s performance which determine value development in the longer term. In financial terms USG People aims to grow revenue and profit. In the short term this growth is influenced by the economic cycle during which periods of economic growth can alternate with periods of contraction. That is why growth objectives need to be considered as averages over the duration of the entire cycle. The strategic objective for profitability from 2014 is for EBITA to average 6% of revenue during the cycle. The aspired results also offer a framework for the expected returns on investment for our shareholders, striking a good balance with the benefits for the other USG People stakeholders. The targeted results provide scope for a consistent dividend distribution along with investments in further development and growth. The financial resources of USG People are provided by investors and financial institutions. USG People s shares have been listed on the stock exchange since 1997, giving the company not only financing from banks but also access to the capital market. This access to the capital market has increased USG People s possibilities to achieve its growth ambitions. By investing in the organic growth of the organisation and in acquisitions, USG People has grown into one of the main HR services providers in Europe. Since it became listed on the stock exchange USG People has only launched issues on the capital market to finance large acquisitions. OVERVIEW & STRATEGY 019

22 Development of dividend in euros optional dividend cash dividend stock dividend USG People invests a great deal of time in its relationship with shareholders and banks. These groups have to understand our business, believe in our vision for the future and strategy and above all have faith in our leadership. The longstanding relationship with our banks is a good example of our aim to build up successful, sustainable relationships with our stakeholders. Such sustainable relationships contribute to stability in the continuity of our financing, also in times when economic conditions are less favourable. To provide a good insight into the state of affairs and to increase faith in our company, USG People communicates clearly and regularly about market developments, operational and financial results and strategic progress. The board attaches a great deal of importance to being transparent to financiers and accessible to investors while at the same time paying a lot of attention to its relationships with investors and shareholders. also means dealing carefully with the natural resources we borrow. We take responsibility as much as we can because we realise that ecology is the basis of the economy and not the other way around. USG People fulfils an explicit, important role in society through its core activities. A well-functioning job market is a basic ingredient for economic and social prosperity. The focus of USG People s SR policy is on the factor people. It goes without saying that the company also pays due attention to how it deals with the environment. USG People has structured its SR policy around five spearheads: 1. being a good employer; 2. sound business practice; 3. diversity; 4. corporate citizenship; 5. environmental impact. Meetings and roadshows are organised to provide clear and proactive communication to investors, analysts and the financial media. Every quarter the publication of earnings is accompanied by a presentation for analysts and the media. The publications and presentations are also made available on the USG People website. The board members and representatives also take part in conferences and roadshows for investors and conference calls and meetings are held to maintain contact with shareholders. SOCIETY AND THE ENVIRONMENT As a company USG People is a part of a larger entity the society in which we live and the environment, the core of our existence. A well-functioning society is very important to organisations, and this USG People shapes being a good employer in a broad way. It wants to be an attractive and innovative employer for its direct and indirect employees. An employer that is accessible and that wants employees to do what they do best. A partner that tries to make all its employees sustainably employable. To do so we offer direct and indirect employees the facilities, conditions and support they need to excel. We define sound business practice as the creation of value with a sustainable balance for all stakeholders. Our employees must be able to develop in good working conditions. Financiers should achieve an attractive return on investment and our services should provide added value to our business partners. Furthermore we must act in a responsible and sustainable way in society and the environment in which we live.

23 In the context of diversity USG People takes into account all aspects of the way people differ from each other. This is a broad definition because USG People believes that people cannot be defined based on just one trait. It is important to USG People to see all the different aspects of a person. This includes both visible aspects, such as gender and ethnicity, and less visible aspects, such as ways of working and character traits. USG People is expressly focused on social involvement, i.e. the way that we give back to communities and society as a whole. USG People wants to contribute to a fair society, for example by making its staff, facilities and resources available without any personal or corporate gain. USG People mainly does this by focusing on areas in which it can make a difference: sharing its knowledge about the labour market, using its network more widely and promoting inclusiveness in the workplace. Everybody should be able to do their bit. It goes without saying that USG People is focused on people, but the company also pays attention to the environment, our habitat. Our branches use office space and we travel mainly by road. This results in CO 2 emissions. We believe it is our responsibility to take measures to reduce these emissions to a minimum. USG PEOPLE IS EXPRESSLY FOCUSED ON SOCIAL INVOLVEMENT, I.E. THE WAY THAT WE GIVE BACK TO COMMUNITIES AND SOCIETY AS A WHOLE OVERVIEW & STRATEGY 021

24 OUR SPECIALISATIONS LEND THEMSELVES WELL TO FURTHER DEVELOPMENT AND GROWTH MISSION AND VISION MISSION People make all the difference, each with their own unique talent and passion. It is our mission to help people find the job that suits them best while at the same time providing our clients with the best possible employees. As a partner in employment we are the link to the job market for an ever-growing number of people and organisations. We use the expertise we have gained over the years to offer a multitude of opportunities for employment, learning and careers. We use our know-how to help our clients connect with the best candidates which, in turn, allows them to operate as effectively as possible in the market with well-qualified employees. The market is constantly changing under the influence of economic developments, on the one hand, and the availability of qualified employees, on the other. We believe in talented people who can make a difference when they are employed in the right place. It is this combination that enables us to attract the best candidates and connect them to the right jobs. VISION Our aim is to hold a leading position in the markets we have selected. USG People s core activities provide a robust basis and unique starting point to support this objective. Our specialisations lend themselves well to further development and growth, both organic and through acquisitions. Using our know-how we expand on our leading positions in these specific markets and niche markets and create added value for all our stakeholders. Innovation and new ways of working help our organisation continue to develop and make it more sustainable.

25 BUSINESS PRINCIPLES INVOLVEMENT Involvement is a fundamental aspect of USG People s operations in various respects. Its value can largely be found in the employees, i.e. our human capital. Bringing these people together creates a maximum level of knowledge and expertise in our organisation, one of the most defining value drivers in the services we provide. The business principles form the core of the culture and identity that USG People pursues in fulfilling its mission and vision. USG People believes strongly in its segmented market approach and operates in the conviction that the responsibility it gives to its operating companies enables them to develop and grow successfully. The business principles form the shared values that are expressed throughout the organisation in our day-to-day activities. COMMITMENT TO RESULTS The creation of value at USG People is largely determined by its employees. They are the engine behind the results which the organisation achieves for all of its stakeholders. For USG People, having a result-oriented culture is the basis for good returns and continuity. Being committed to results is a key characteristic of our business as competition is fierce and a great deal is expected of everyone s individual performance. The commitment to results of our employees helps our clients succeed. Our daily focus is on our clients and we think in terms of opportunities and possibilities. Our starting point is that there is always room for improvement. Providing service is always our top priority with the needs of our clients being the primary consideration. Pro-activity, responsibility and drive therefore play an important part in our employees development, allowing us to create a winning mentality and foster dedication and focus in our work. PASSION The right match results in passionate employees and passionate employees find the right matches. The passion of our own employees shows clients and candidates that USG People makes the right matches between the ambitions and competencies of our candidates and the jobs offered by our clients this is an essential part of the services we provide. We are enterprising, hard-working professionals who are passionate about what we do. Passion is the energy that propels us. Passionate people dare to break down existing boundaries and put forth their ideas and proposals with conviction and enthusiasm. People who can back up and defend their ideas and choices, resulting in successful relationships with clients and candidates. This is the essence of the USG People culture. USG People s services are the motor oil in the job market. The essence of our existence is to bring together supply and demand in the job market in the best possible way this starts with building relationships with clients and candidates. PROFESSIONALISM Ensuring our employees have specific knowledge and expertise and can use it effectively is another defining factor that sets our services apart. Our employees set high standards for themselves and each other. Having a high level of specific knowledge and focusing on quality are major drivers within USG People. The organisation has a great capacity for learning and is able to adapt and implement new things quickly. This enables USG People to apply knowledge and insights directly to our own practice and this benefits the services we provide to our clients. USG People aims to apply new ways of working with efficient organisational structures. In such an environment the professionalism of employees is a precondition to be able to be a leader and to ensure the proper functioning of the organisation, with faith in the effectiveness of our employees. PROGRESS USG People aims to constantly increase its added value. The services sector is a sector in which innovation and technological applications also play a growing role in the ability of the sector to set itself apart. Applying new technologies contributes to the development of our added value and makes us more competitive. The drive of our employees to progress promotes and facilitates this development throughout the entire organisation. We believe that everything can be better, more effective and efficient. That is why our corporate culture is aimed at innovation and creativity. A culture of dialogue, experimenting and constant improvement. USG People is an organisation that is constantly looking for the best way to serve its clients, identifying opportunities to innovate and coming up with possibilities for new products and services. OVERVIEW & STRATEGY 023

26 STRATEGY USG People aims to grow by further developing its strong business units and by investing in expanding promising concepts. The activities of USG People are grouped into four distinct brands Start People, Unique, Secretary Plus and USG Professionals each focused on a specific market segment. The positioning is concentrated in four core countries, markets that offer fundamentally good opportunities for growth and attractive returns. Secretary Plus and USG Professionals have also been rolled out outside of the core areas in a few countries with an attractive market for their services. The basic condition for the strategy is sustainability, healthy growth while maintaining continuity, and an attractive return for all stakeholders. STRATEGIC KEYSTONES STRENGTHEN EXISTING LEADING POSITIONS EXPAND HIGH-VALUE GENERATING CONCEPTS INCREASE EXPOSURE IN GROWTH MARKETS FOCUSED CAPITAL ALLOCATION GENERAL STAFFING Start People SPECIALIST STAFFING Unique Secretary Plus PROFESSIONALS USG Professionals distinct brands with effective business models tailored concepts competitive landscape DISTINCTIVE STAR BRAND BUSINESS MODELS USG People has structured its business models in a distinct way for all its brands. For each brand the organisation, network, expertise, applied technology and services offered are focused on providing added value in the specific market segment in which it operates. Start People aims to provide solutions with large volumes, mainly to large organisations. It offers solutions for organising flexible labour in a cost-effective way and maintains an extensive network of candidates with a wide composition of profiles and a client network spread across all sectors. As an HR business partner that is focused on clients in the SME segment, Unique also provides specialist office placements with large organisations. The composition of Unique s network of candidates is diverse and the services are provided in every sector. Secretary Plus and USG Professionals are geared towards specific profiles. Secretary Plus offers HR solutions to support management and USG Professionals is focused on providing solutions for highly-educated profiles in the specialist fields of engineering, finance, HR, ICT, legal, marketing & communication and science.

27 TAILORED OPERATIONAL CONCEPTS More and more job seekers initially come into contact with the USG People operating companies via the internet, resulting in a strong increase in the importance of good online facilities and the need for operational concepts to also evolve. The internet is gradually taking over certain roles from the traditional network of physical branches. These days an effective network consists of a combination of physical branches and an internet platform. USG People is responding to the increased importance of the internet in a very active way by constantly developing the functionality of the online platform to actively recruit candidates. STRENGTHENING COMPETITIVE POSITION By applying tailor-made operational concepts each of the brands is receiving a targeted and distinctive position in its market segment. USG People is constantly investing in development its position by adapting the quality and effectiveness of its organisation and processes, e.g. by using new technology. These investments strengthen the competitive position of our organisation. Large steps have been taken in recent years which have improved the quality of the operations in important areas, on the one hand, and structurally lowered the level of operating expenses, on the other. LOCATION FACTORS GEOGRAPHIC POSITIONING USG People is the second largest HR services provider in the Netherlands and Belgium. All four USG People star brands are among the leading players in their market segment in these countries. USG People has a strong footprint in the neighbouring countries of France and Germany where the company provides its services to clients and candidates throughout the countries. USG People is active with its Start People and USG Professionals brands in France and with Unique, Secretary Plus and USG Professionals in Germany. The positioning in these four core countries forms a promising basis with sufficient scale and healthy growth and profit potential. The activities of Secretary Plus and USG Professionals are also located in Italy, Luxembourg, Austria and Switzerland. The countries offer good prospects for added value from the concepts provided by these brands. Competitive landscape The competitive landscape in each of the countries in which USG People operates differs. In the Netherlands, Belgium and France the top 3 players have a considerable market share, whereas the market in Germany is more fragmented. In the Netherlands and Belgium USG People has the second largest market share. In France and Germany USG People is a top 10 player with a market share of a few percent. The core countries in which USG People operates are characterised by the presence of both the global top 3 players and many small local players. In recent years there was an increase in number of self-employed people with no staff who are also active in the market as flexible workers. These countries are also characterised by the emergence of staffing services offered via the internet and social media, as well as services containing elements of HR services. In the past few years the number of HR services providers in our markets has risen, resulting in growth in the size of the total flexible staffing market. The entry of new, small local players has boosted the market share of this category. A larger and more fragmented market benefits USG People. The USG People operating companies can benefit from their focused positioning with their effective commercial organisation. NETHERLANDS BELGIUM Positioning of USG People in our markets In the countries where it has leading positions, USG People distinguishes itself from its competitors through its separate propositions in each market segment. This specialised approach results in clear recognisability for flex workers and maximum added value for its clients. It also leads to good value for money in both the volume segment and specialist placements. FRANCE GERMANY In countries where it does not have a leading position the focus of USG People s services and positioning is mainly on local companies, contrary to the large players that have a more widely spread scope. USG People sets itself apart from many small players on the market due in part to its reliability on quality and speed, its knowledge of the job market and laws and legislation, top 3 other USG People OVERVIEW & STRATEGY 025

28 its nationwide reach and its efficient organisation. It is also better able to invest in innovation and technology and group best practices can be applied which, results in the creation of more added value for clients. USG People increases its competitiveness through constant improvement projects aimed at operational and commercial excellence. The services are always aligned with the possibilities in the playing field and the ever changing needs of clients and candidates. This increasingly involves using technological applications to innovate the services and operational processes. The application of technology and effective development of specialist expertise are powerful, distinctive elements in the services provided by USG People. LAWS AND REGULATIONS The job markets in European countries are regulated by international and local guidelines and laws and legislation. On a general note, for a few years now there has been a trend towards the liberalisation of regulations and towards a more friendly policy with regard to flexible labour and the providers of HR services. This benefits the image of flexible labour, which has improved the image of flexible labour and the social acceptance of working via an HR services provider. This is a positive development for USG People as it supports growth. Demand for our services is influenced by changes in regulations. Contracts and labour conditions for flex workers are based on this and partly determine the cost for our clients so changes can have an impact, particularly in the short term. Positioning of USG People on laws and regulations Equal treatment and payment of flex workers has largely been introduced in the core countries in which USG People operates. USG People focuses its services on providing added value, e.g. in HR advisory and outsourcing solutions, which is not driven by a low cost of labour. USG People offers more and more comprehensive HR solutions with a growing number of elements that are not directly influenced by these laws and regulations. Due to the broad experience and expertise within the USG People organisation, changes in regulations can be applied effectively and the most can be made of any opportunities and benefits they present. USG People offers. Demographic and diversity requirements also have an impact on availability. Position of USG People on candidate availability USG People has an extensive network of talent at its disposal and maintains close relationships with its candidates. We assist candidates and help them develop their talents so that they continue to grow and improve the way they shape their careers. USG People does this by offering courses in specialist areas where supply is low. USG People is constantly working to maintain its expertise in the various specialist fields to ensure that candidates get the best possible support in their career. A large part of our intermediaries in higher educated segments are educated or experienced in the same field as the professionals who USG People places with clients. They know the specific field and speak the same language. This community improves the advice and assistance they provide. USG People has an attractive client network with appealing jobs. We offer attractive labour conditions and career prospects to people with competencies in demand and connect them to jobs with clients via flexible solutions. Greater flexibility contributes to better availability and a more sustainable deployment of people. USG People aims to help as many people as possible with the right skills and of all ages participate in the job market. It offers learning opportunities combined with appealing work for clients. CYCLICAL TRENDS Demand for labour depends on economic growth. In the short term this means that demand is cyclical and can rise or fall with economic movements. An increase in production means an increase in demand for labour, while a decline in production means a drop in demand for labour. When demand falls companies first reduce their flexible staff when adjusting their capacity before scaling back their permanent staff base. When the economy picks up companies first increase their flexible capacity. On balance the percentage of flexible staff at companies has structurally risen to be able to effectively respond to economic fluctuations. The cyclical nature of the economy and of demand for HR services results in a certain degree of volatility in the revenue and results of USG People. AVAILABILITY OF CANDIDATES In a well-functioning job market supply and demand for labour meet. In recent years, however, the European markets have been characterised by a growing mismatch between the profiles in demand by companies and availability in the job market. The number of candidates available is sufficient, but the competencies and level of education they possess do not match the profiles needed in the market. There is already a shortage in the market of certain professional profiles. Having the talent with the right knowledge and skills available to meet demand in the job market is a key element in the added value that Position of USG People on cyclical trends The cyclical nature of production is one of the reasons why organisations want to organise their staff in a flexible way. Setting up and providing this flexibility is part of the added value that USG People delivers. The USG People business model is focused on moving in line with the economic cycle. The broad and diverse spread across different sectors and clients sees to it that the impact of the fluctuations is absorbed and that the next stages of the cycle can be anticipated. USG People has a flexible organisation and cost structure that can adapt to volume and revenue developments. Branch consolidation,

29 online distribution, a more flexible set-up of the own staffing organisation and outsourcing of non-core processes ensure more flexible operating costs as well as securing the retention of our knowledge and expertise. This limits the volatility of revenue and profitability. STRATEGIC OBJECTIVES Strengthen existing leading positions Increase exposure in growth markets Expand high value-generating concepts USG People is strengthening its current position within its existing geographic scope by continuing to further develop its propositions. The organisation responds to current trends and increasingly uses technological applications to make its services more and more attractive for clients and candidates. Successful concepts that offer high added value and attractive growth potential are being rolled out within the existing organisation. The aim is to further expand the market share and geographic reach of Secretary Plus and USG Professionals by rolling out to promising regions and market segments. The expansion of USG Professionals will also be shaped by acquisitions. The strategic objectives are monitored every quarter on the basis of growth in the market share of the various star brands and of USG People as a whole, as well as the share of high valuegenerating concepts in USG People in its entirety. STRATEGIC RETURN OBJECTIVES These return objectives are assessed by closely monitoring the productivity per employee, monitoring the ratio of fixed costs to various costs and the share of the different propositions in USG People as a whole. FINANCING CAPACITY USG People finances the investments needed to execute its strategy mainly from its operating cash flow. In the past financing was only attracted in the capital market to finance large strategic takeovers. USG People has credit facilities amounting to 560 million at its disposal. These facilities offer comfortable scope to invest as and when opportunities arise. In managing its debt position USG People pursues a cautious policy bearing in mind the cyclical nature of its activities. The debt ratio (net debt / EBITDA) may not exceed 2.0. In other words, net debt may not be more than twice as high as EBITDA of the past four quarters. The bank facilities provide USG People with stable financing. They have been extended by a syndicate of banks with which USG People has built up a long and good relationship over the years, thus ensuring stability in the continuity of the bank financing. In addition to the bank facilities USG People also has facilities in place that make it possible to sell trade receivables to finance working capital. That means that the operating cash flow does not have to be reduced when working capital increases and that it offers sufficient scope to execute the strategic plans. USG People aims to achieve an average group EBITA margin of 6.0% throughout the economic cycle. USG People reaches this objective with the help of efficient operational processes, a flexible cost structure and a relative increase in the activities that provide high added value. These structural balance sheet objectives are assessed by an absolute reduction in total net debt and by monitoring strategic return objectives, as mentioned above. GENERAL STAFFING 5.0% SPECIALIST STAFFING 7.5% USG PEOPLE 6.0% PROFESSIONALS 10.0% OVERVIEW & STRATEGY 027

30 CORPORATE GOVERNANCE In 2013 USG People adjusted its corporate governance structure. Following the strategic bundling of its branches, the company also adapted its governance to efficiently manage the operations in one of four star brands. The strategic execution also reduced the size and complexity of the organisation considerably. Governance has become more decentralised, with the general managers being given more independence. This adjustment to our corporate governance will enable us to contribute to the further execution of our strategy in the best possible way. USG PEOPLE N.V. USG People N.V. is a limited liability company governed by Dutch law and listed on the stock exchange and governed by the Dutch large company regime. The ordinary shares of USG People are listed on NYSE Euronext Amsterdam. The corporate governance model is a two-tier management structure, with an Executive Board responsible for the day-today management of the company and a Supervisory Board whose duties include supervising the Executive Board s actions and the way it manages the company. The two bodies operate independent of each other and are answerable to the General Meetings of Shareholders. The USG People Articles of Association were most recently amended on 1 February GOVERNANCE STRUCTURE One of the main purposes of good corporate governance is to gain and maintain the trust of all stakeholders trust in the way business is managed and supervised, trust in risk control, trust in financial and non-financial reporting and therefore trust in the company as a whole. Integrity, transparency and clear communication are the vanguards of sound corporate governance at USG People. In compliance with legislation and regulations, the company will provide all shareholders and all other parties at the same time with the same information on topics that could have a significant impact on the share price, subject to exceptions stipulated by law. Strict compliance with the basic principles of integrity, transparency and clear communication are high on USG People s agenda. The internal processes are devised as carefully and transparently as possible, ensuring that these values are adhered to throughout the organisation. The main external legislation and regulations applicable to USG People are: Dutch civil code; NYSE Euronext listing rules; Dutch Corporate Governance Code; collective labour agreements; Dutch Act on Financial Supervision. The main internal rules and regulations: articles of association; code of conduct; internal regulations of the Supervisory Board and regulations of the internal committees; internal regulations of the Executive Board; Corporate Delegation of Authority Scheme (CDAS); policy regarding bilateral contacts with shareholders, investors, analysts and media; whistleblower policy; corporate guidelines and policy, e.g. the Tracking Compliance Programme, Model Code and the Rules and Regulations governing Fraud. In the past decade USG People has, if necessary, adjusted and further enhanced its governance model. The Dutch Corporate Governance Code from 2003 and subsequent amendments made in 2008 have played an important role in this respect. The Executive Board and the Supervisory Board believe that the existing corporate governance structure, as expanded on in more detail in this section, is the most suitable model at this time. With the exception of aspects of the corporate governance structure that can only be adapted with the approval of the General Meeting of Shareholders, the Executive Board and Supervisory Board will only adjust the corporate structure if it is in the best interests of the company. Any such changes will be expanded on in the annual report. THE GENERAL MEETING OF SHAREHOLDERS A General Meeting of Shareholders is held at least once a year. The agenda, annexes and registration process are published with the notice convening the meeting and are available on the company s website. The annexes contain all relevant information with regard to resolutions on the agenda. All decisions are taken based on the one share, one vote principle. Resolutions are adopted by an absolute majority of votes, unless otherwise provided by law or in the Articles of Association of the company. The annual accounts are signed off by the Supervisory Board and are submitted annually to the General Meeting of Shareholders for adoption.

31 The General Meeting of Shareholders has control of important matters including: adopting the financial statements; profit appropriation; the reserves and dividend policy; approving amendments to the Articles of Association; deciding on the remuneration policy of the Executive Board; approving the remuneration of the Supervisory Board; transferring the company or a part thereof to a third party; authorising the purchase, issue or sale of shares in the capital of USG People; appointing the external auditor; granting the discharge of the Executive Board and Supervisory Board. The minutes of the General Meeting of Shareholders are made available no later than three months after the meeting, after which shareholders have a period of three months to respond. THE SUPERVISORY BOARD COMPOSITION The Supervisory Board consisted of five people until the General Meeting of Shareholders in May 2013: Cees Veerman (chairman), Joost van Heyningen Nanninga, Rinse de Jong, Marike van Lier Lels and Alex Mulder. The term of Joost van Heyningen Nanninga expired in 2013 and the Supervisory Board has consisted of four people ever since. The percentage of women on the Supervisory Board was 25% at the end of That means that the Supervisory Board of USG People does not yet quite meet the 30% requirement stipulated in the Dutch Act on Management and Supervision (Wet Bestuur en Toezicht). USG People aims to achieve a wide and diverse composition of staff within all levels of the company and will take the requirements into consideration as much as possible in future appointments. The Supervisory Board aims to achieve a well-balanced composition as stated under the diversity objectives in the Supervisory Board profile. The Supervisory Board has two internal committees: the audit committee and the remuneration and appointments committee. Each committee has its own internal regulations which define the duties, responsibilities and procedures. The regulations, as well as the regulations of the Supervisory Board, can be perused via the USG People website. For the composition of these internal committees as well as a detailed account of their activities please refer to the committees reports in the report of the Supervisory Board. DUTIES It is the duty of the Supervisory Board to supervise the policy of the Executive Board and the way it manages the company. In addition the Supervisory Board advises the Executive Board, both on request and at its own initiative, on the strategy and the realisation of corporate objectives. Furthermore, the Supervisory Board acts as the employer of the members of the Executive Board. In the performance of its supervisory duties the Supervisory Board also considers the social aspects of business practices relevant to USG People and relations with all stakeholders. The Supervisory Board must approve decisions pertaining to the following matters: setting and altering the operational and financial targets of USG People; setting and altering the strategy aimed at realising the corporate objectives; setting and altering the parameters applying to the strategy, for example with respect to the financial ratios; setting and altering the relevant aspects of corporate social responsibility; all transactions between USG People and natural persons or legal entities in possession of at least 10% of the shares in USG People which are of material importance to USG People; all transactions for which a conflict of interest may exist for the members of the Executive Board and which are of material importance to USG People and/or the members of the Executive Board involved; all transactions for which a conflict of interest may exist for the members of the Supervisory Board and which are of material importance to USG People and/or the members of the Supervisory Board involved; the appointment and dismissal of the secretary of USG People; the appointment of a member of the Executive Board as CEO or CFO; the allocation of tasks of the Executive Board to individual members of the Executive Board; any other acts that require approval by law or as stipulated in the Articles of Association, the Regulations of the Executive Board, the Regulations of the Supervisory Board, the Dutch Corporate Governance Code or any other applicable rules and regulations. In addition to existing legal and statutory requirements and provisions, the Supervisory Board has set its own rules to govern its own performance and that of its committees, with which they must also comply. AUDIT COMMITTEE The tasks of the audit committee include advising the Supervisory Board with respect to the operation of the internal risk management and control systems. This means compliance with the relevant laws and regulations and monitoring the functioning of codes of conduct. The committee s tasks also include policy for and monitoring of the execution of fiscal planning, financing, the control and assessment of the financial OVERVIEW & STRATEGY 029

32 and non-financial reporting process and the application of information and communication technology. The chairman of the committee reports the main findings to the Supervisory Board. The minutes of the committee meetings are shared with every member of the Supervisory Board. REMUNERATION AND APPOINTMENTS COMMITTEE The main tasks of the remuneration and appointments committee include establishing the profile and size of the Executive Board, determining the remuneration structure and desired performance and remuneration of the individual members of the Executive Board. The committee also assesses the performance of the individual members of the Supervisory Board and makes proposals with regard to the size and composition of the Supervisory Board. The committee is also responsible for determining the desired profile for the members of the Supervisory Board and proposing members of the Executive Board. The chairman of the committee reports on the main findings to the Supervisory Board. APPOINTMENT AND RETIREMENT OF MEMBERS OF THE SUPERVISORY BOARD The members of the Supervisory Board are appointed by the General Meeting of Shareholders on the recommendation of the Supervisory Board. Supervisory Board members are appointed for a maximum of three four-year terms. Members of the Supervisory Board retire by rotation according to the retirement rota. The deadline for Supervisory Board members to step down is the day of the first General Meeting of Shareholders after expiration of the four-year term since their last appointment. REMUNERATION The members of the Supervisory Board receive a fixed annual salary which is determined by the General Meeting of Shareholders. Further information on the composition and amount of the remuneration is included in the remuneration report and in the section on remuneration in the annual report. INDEPENDENCE Best practice provision III.2.1 of the Corporate Governance Code was complied with. Alex Mulder operated as CEO of USG People until 9 May He still currently holds more than 10% of the company s shares. Therefore he may not be considered independent under best practice provision III.2.1 of the Code. DIVERSITY OBJECTIVES The Supervisory Board has created a profile of its own organisation, taking into consideration such aspects as nationality, age, gender, experience, expertise and social diversity. It is the objective of the Supervisory Board to include at least one member at all times: who does not hold Dutch nationality; who has experience in the political, administrative, social and ethical or academic sector; who has financial expertise; who possesses specific experience relating to the operations of USG People and knowledge about the labour market. Another objective is to achieve a balanced composition of the Supervisory Board with at least 30% of the members being female and at least 30% being male. The aim of appointments is to ensure the best possible balance and diversity in the composition of the board. ADOPTING FINANCIAL STATEMENTS, DIVIDEND PROPOSAL AND DISCHARGE The Supervisory Board submits the financial statements drawn up by the Executive Board to the General Meeting of Shareholders. Furthermore the Supervisory Board requests approval of the General Meeting of Shareholders for proposals with regard to dividend and the granting of discharge of the members of the Executive Board in respect of their management activities as well as to the Supervisory Board in respect of its supervision of these management activities. EXECUTIVE BOARD COMPOSITION At the end of 2013 the Executive Board consisted of two people, namely Rob Zandbergen (CEO) and Leen Geirnaerdt (CFO). The percentage of women on the Executive Board was 50% at the end of That means that the Executive Board of USG People meets the 30% requirement stipulated in the Dutch Act on Management and Supervision (Wet Bestuur en Toezicht). USG People aims to achieve a wide and diverse composition of staff within all levels of the company and will take the requirements into consideration as much as possible in future appointments. DUTIES The Executive Board manages the business on a day-to-day basis and is responsible for the strategy, for setting and realising targets and for achieving results. The Executive Board is also responsible for the quality and completeness of the financial reports published by the company, for risk management and control mechanisms, for compliance with legislation and regulations and for the financing of USG People. The Executive Board is bound by the regulations of the Executive Board in addition to regulatory requirements and the relevant provisions of the Articles of Association. The regulations of the Executive Board clearly state the division of duties of the individual directors. For example, the regulations state that the

33 CEO s duties include being responsible for strategy, corporate sales & marketing, HR, innovation, internal audit and SR. The scope of the CFO s duties includes responsibility for financial reporting, communication & investor relations, ICT, legal, tax and treasury. is included in the remuneration report. The main elements of the contracts with the Executive Board members are included in the section on remuneration in the annual report. The complete remuneration report can be found on the company s website. The size and complexity of the organisation was reduced considerably in 2013, resulting in a simplification of the management structure of USG People. The Executive Board was reduced from five members to two, the divisional management disappeared and the corporate staff departments were scaled down. This had quite an impact on the management structure in the past year. More independence has been given to the operating companies, who now report directly to the CEO and CFO. Individual members of the Executive Board can specifically be responsible for certain management duties, without prejudice to the collective responsibility of the Executive Board as a whole. The Executive Board remains collectively responsible for decisions, even if these have been drafted by individual members of the Executive Board. The Executive Board is collectively authorised to represent the company both in judicial and other matters. The power of representation is jointly granted to two members of the Executive Board. This also applies for other directors, barring any legal and/or statutory reserves provided for by the Articles of Association. This is stipulated in the Corporate Delegation of Authority Scheme. APPOINTMENT AND DISMISSAL OF MEMBERS OF THE EXECUTIVE BOARD The members of the Executive Board are appointed by the Supervisory Board. The Supervisory Board nominates one or more candidates for appointment and informs the General Meeting of Shareholders of the proposed appointment. In principle the Supervisory Board appoints members of the Executive Board for a four-year term, unless there are compelling reasons for deviating from this. At the conclusion of the four-year term, the member of the Executive Board can be reappointed, in accordance with best practice provision II.1.1. of the Corporate Governance Code. The current members of the Executive Board have each been appointed for a period of four years. The Supervisory Board may suspend or dismiss a member of the Executive Board at any time, provided that no member of the Executive Board is dismissed before the General Meeting of Shareholders has expressed its views on the dismissal. REMUNERATION In line with the remuneration policy that was approved by the General Meeting of Shareholders in May 2011, the remuneration of the members of the Executive Board is determined by the Supervisory Board, on the advice of the remuneration and appointments committee. The composition and amount of the remuneration, as well as an account of the remuneration policy, THE DUTCH CORPORATE GOVERNANCE CODE USG People applies a corporate governance policy in line with the Dutch Corporate Governance Code (hereinafter referred to as the Code ) (see the Government Gazette no of 3 December 2009 for the text of the Code). The Code is based on the comply or explain principle. That means that companies listed on the stock exchange are required to explain in their annual report how they complied with the Code and to give a motivated account of the principles pertaining to the Executive Board and Supervisory Board as well as of any best practices which have not been applied. DEVIATIONS FROM THE CODE USG People is in full compliance with the Code. The only point in which the USG People policy deviates from the Code has been approved by the shareholders. The following provides an explanation of the best practice provision from which USG People deviates. The new remuneration policy for the Executive Board for the period came into force on 1 January The remuneration policy complies with the provisions of the Dutch Corporate Governance Code in all respects, with the exception of severance pay upon termination of an Executive Board member s contract of employment in the event of a takeover of the company resulting in a change of control. In this case the termination payment shall amount to twice the fixed gross annual salary, including pension contribution, increased by one-twelfth of this fixed gross annual salary, including pension contribution, for each year of employment with USG People. However, this termination payment shall not exceed three times the fixed annual salary including pension contribution. This is at variance with provision II.2.8. of the Code. USG People applies this policy regarding severance pay in the event of a change of control in recognition of the long-term employment of members of the Executive Board and moreover, given the shareholder structure of USG People, to protect their position as directors of the company. The remuneration policy was approved by the shareholders at the General Meeting of Shareholders on 26 May 2011 who thereby assented to the fact that with regard to severance pay in the event of a change of control USG People is in deviation from the provisions of the Code. As from 8 May 2013 the chairman of the Supervisory Board, Cees Veerman, has also assumed the role of interim chairman of OVERVIEW & STRATEGY 031

34 the remuneration and appointments committee. His chairmanship of the remuneration and appointments committee deviates from best practice provision III.5.11 of the Corporate Governance Code. Cees Veerman is chairman of the remuneration and appointments committee on a temporary basis. This authority relates to a maximum of 10% of all shares of the issued capital of USG People as at the time of issue. Each year the General Meeting of Shareholders is requested to extend this period for a period of 18 months from the date of General Meeting of Shareholders. The General Meeting of Shareholders held on 8 May 2013 approved the temporary chairmanship of the remuneration and appointments committee by Cees Veerman and therefore approved to this temporary deviation from the Code. This complete section can be considered to be the corporate governance statement as referred to in Article 2a of the Dutch Decree on additional requirements for annual reports (Vaststellingsbesluit nadere voorschriften inhoud jaarverslag) as last amended as of 1 January 2010 (the Decree ). CAPITAL STRUCTURE AND PROTECTIVE MEASURE At 31 December 2013 the authorised share capital of USG People stood at 100,000,000, consisting of 200,000,000 shares with a nominal value of 0.50 each. The shares are divided into 100,000,000 ordinary shares and 100,000,000 preference shares. The issued capital at that date was 80,483,677 ordinary shares. Each ordinary share represents one vote. BUYBACK OF OWN SHARES At the General Meeting of Shareholders on 8 May 2013 shareholders authorised the Executive Board with the approval of the Supervisory Board to buy back USG People shares for a period of 18 months as from 8 May Shares may be purchased under any agreement subject to the following conditions: the buyback must not exceed 10% of the outstanding share capital; and the price must be between the nominal value and 110% of the stock market value. At the General Meeting of Shareholders held on 8 May 2013 shareholders also granted the Executive Board a mandate for a period of 18 months from 8 May 2013 to purchase with the approval of the Supervisory Board any preference shares placed with the Foundation. This buyback of preference shares may only take place at a price equal to the nominal value plus the current dividend and any dividend in arrears. ISSUE OF SHARES AND PREFERENCE RIGHTS The Executive Board is designated as the body authorised to take decisions regarding the issue of shares subject to the approval of the Supervisory Board and in accordance with the stipulations of the Articles of Association and legal provisions. Every year the General Meeting of Shareholders is customarily requested to extend the period for which the Executive Board is designated as the body authorised to limit or exclude legal preferential rights. The extension applies to the same period for which the Executive Board is authorised to issue shares. The Executive Board will only exercise this authority if it is in the best interests of USG People to do so. STICHTING PREFERENTE AANDELEN The foundation Stichting Preferente Aandelen USG People (hereinafter referred to as: the Foundation ) was established in In accordance with its Articles of Association, the Foundation shall endeavour to serve the best interests of USG People, its associated businesses and all parties connected to it, warding off as much as possible any influences that could conflict with the continuity, independence and identity of the company. These influences may result from a (considerable) interest in USG People built up by a third party, the announcement of a public offer or other concentration of control, or any other form of unreasonable pressure exercised on the company to change the (strategic) policies of USG People. The Articles of Association of USG People provide for the possibility of issuing preference shares as a temporary protective measure. USG People considers it undesirable for preference shares to remain outstanding for any longer than is strictly necessary. Accordingly, article 7.8 of the Articles of Association of USG People stipulates that in the event of the issue of preference shares a General Meeting of Shareholders shall be held no later than 18 months after the initial issuance of these shares. A decision concerning the buyback or cancellation of the preference shares must be put on the agenda for that meeting. USG People has granted the Foundation a call option to take up preference shares. The call option is divided into two parts: the first call option entitles the Foundation to take 30% (minus one share) of the voting rights. The second call option grants the Foundation the right to take 100% (minus one share) of the total issued capital, i.e. shares other than preference shares, issued at that time. This second call option can only be exercised, in whole or in part, after the announcement of a public offer for all shares in USG People, as referred to in article 5:71 sub 1 part c of the Dutch Financial Supervision Act. The call option agreement means that the decision to issue preference shares lies with the Foundation and not with the Executive Board, nor the Supervisory Board of USG People.

35 In addition to the aforementioned call options, the Foundation also has the right of inquiry. The Foundation can make use of this right in situations where it may not wish to exercise its right to take preference shares but which, in the opinion of the Foundation, justify the need for legal intervention in view of the definition of its objects in the Articles of Association. The Foundation will operate independently from USG People. In doing so, it is in compliance with the requirements stipulated in the Dutch Financial Supervision Act with respect to a foundation of this type. In 2013 the board of the Foundation consisted of Messrs R. Pieterse (chairman), J.F. van Duijne and Professor M.W. den Boogert. The board members have drawn up a retirement schedule aimed at ensuring the continuity, knowledge and expertise of the Foundation. MAJOR HOLDINGS Under the Dutch Financial Supervision Act, shareholders are required to report holdings that exceed certain set percentages to the Netherlands Authority for the Financial Markets (AFM). Under the Dutch Act on the Disclosure of Major Holdings in Listed Companies the following interests were declared on 31 December 2013: Alex Mulder 19.9% Dimensional Fund Advisors, L.P. 3.6% JPMorgan Asset Management U.K. Limited. 3.2% Norges Bank 3.1% DIVIDEND POLICY The objective of USG People s long-term dividend policy is a dividend payout of one-third of net profit before amortisation, adjusted for the effects of unrealised value adjustments to interest rate derivatives. It is determined each year whether the dividend will be offered in cash or fully in ordinary shares and whether it will be charged to the share premium reserve or to other reserves. RISK MANAGEMENT AND CONTROL SYSTEMS A description of the internal risk management and control systems can be found in the risk section of this annual report where the Executive Board states with regard to financial reporting risks that the internal risk management and control systems provide a reasonable level of certainty that no material inaccuracies are contained in the financial reporting and that the risk management and control systems functioned properly in the year under review. The Executive Board provides a clear justification and in doing so USG People complies with best practice II.1.5. SECURITIES TRANSACTIONS Members of the Executive Board and Supervisory Board must comply with the so-called Model Code. This regulation sets out how transactions involving securities of USG People should be conducted and prohibits trading during the so-called closed periods. Responsibility for Model Code compliance checks lies with the USG People Compliance Officer. In addition to the Model Code, members of the Executive Board and Supervisory Board are bound to the Tracking Compliance Programme, which sets out the rules for monitoring transactions involving the securities of direct competitors, the so-called Peer Group. Any transactions involving securities in these companies must be reported in advance to the USG People Compliance Officer. Transactions involving securities of companies outside the Peer Group do not require prior permission; nor are they subject to a regular reporting obligation. CONFLICTS OF INTEREST Any transactions involving a potential conflict of interest for members of the Executive Board or Supervisory Board must be published in the annual report. Under the Code, any such transactions are subject to agreement under the conditions customary for the sector. During 2013 no transactions took place which could be qualified as involving a conflict of interest. Provisions aimed at preventing conflicts of interest with respect to such transactions are included in the Regulations of the Executive Board and the Regulations of the Supervisory Board. The other transactions with the large shareholder are expanded on in the financial statements, see note 29. AUDITOR The independence of the external auditor is intrinsically valuable. To ensure its independence USG People has drafted the policy included in the annex to the Supervisory Board regulation entitled Policy governing the independence of the external auditor. The policy covers the rotation and appointment of the external auditor, as well as the basic principles of independence. Upon the recommendation of the audit committee and approval of the Executive Board, the Supervisory Board is responsible for the remuneration of the external auditor and instruction to provide non-audit services. The General Meeting of Shareholders held in May 2013 appointed PricewaterhouseCoopers Accountants N.V. for a period of three years, i.e. to audit the annual accounts for the 2013, 2014 and 2015 financial years. The auditor s report is included elsewhere in the annual report. OVERVIEW & STRATEGY 033

36 FINANCIAL CALENDAR 30 JULY 2014 Publication of second-quarter results (before market opens) Analysts meeting and press conference on second-quarter results 2 MAY 2014 Publication of first-quarter results (before market opens) Analysts conference call on first-quarter results 8 MAY 2014 Annual General Meeting of Shareholders

37 27 FEBRUARY 2015 Publication of fourth-quarter and annual results (before market opens) Analysts meeting and press conference on fourth-quarter and annual results 31 OCTOBER 2014 Publication of third-quarter results (before market opens) Analysts conference call on third-quarter results OVERVIEW & STRATEGY 035

38 HIGHLIGHTS 2013 FEB DISPOSAL OF USG ENERGY USG People sharpens its focus of the Professionals division. The sale of USG Energy is finalised on 27 February. APR ROLLOUT OF USG PROFESSIONALS The introduction of USG Professionals marks USG People s launch of an international HR services provider for professionals, by professionals in seven specialist areas of expertise. EXPANSION OF ONLINE SERVICES WITH ADVER-ONLINE The acquisition of Adver Online further strengthens the online services offering. JUNE DISPOSAL OF GENERAL STAFFING ACTIVITIES IN SIX COUNTRIES USG People s geographic scope focuses on markets where it can provide significant added value and create sufficient size. The General Staffing activities in Spain, Italy, Austria, Switzerland, Poland and Luxembourg are sold.

39 JULY OPTIMISATION OF FINANCING STRUCTURE USG People adapts its bank facilities in line with the adjusted organisation and takes on a 60 million subordinated loan. FIRST POSITIVE SIGNS The first signs of recovery become visible in the results of a few operating companies. OCT CHANGE IN GOVERNANCE STRUCTURE The governance structure of the organisation is changed. The Executive Board is reduced to two members and the corporate organisation is scaled back. UNIFICATION OF BRANDS IN FOUR STAR BRANDS The USG People brands will work together more closely and are unified in four star brands: Start People, Unique, Secretary Plus and USG Professionals. DEC TURNING POINT TO GROWTH The positive trends continue and the turning point to growth is reached in December. POSITIVE TRENDS VISIBLE The initial positive signs that became visible in the second quarter turn into a positive trend. OVERVIEW & STRATEGY 037

40 1 2

41 EXECUTIVE BOARD MEMBERS PROFILES 1 ROB ZANDBERGEN, CEO Rob Zandbergen (1958) has been CEO of USG People N.V. since 1 July 2010 and has been active in the temporary employment sector since early In addition to his work at USG People, Rob sits on various executive and supervisory boards. He is a member of the supervisory board of the Dutch Flower Group and chairman of the supervisory board of SNT. In recent years he also served on the board of StiPP, the Dutch pension fund for the staffing sector, and the Dutch Federation of Private Employment Agencies (ABU). Rob graduated from the Royal Netherlands Military Academy in Breda, where he specialised in administration and economics, after which he studied business economics at the University of Amsterdam. Rob has held various national and international executive positions at publicly listed companies. Rob Zandbergen holds Dutch nationality. 2 LEEN GEIRNAERDT, CFO Leen Geirnaerdt (1974) joined the Executive Board of USG People N.V. as Chief Financial Officer on 1 November Leen started her career at PricewaterhouseCoopers, where she worked as an auditor and manager for six years before moving to Solvus Resource Group in the position of Corporate Controller. After the acquisition of Solvus N.V. by USG People, Leen Geirnaerdt held various senior management positions, including that of General Manager of USG People Belgium s Shared Service Center Transactions & Support from Leen studied Applied Economics with an Accountancy option at the University of Antwerp. Leen Geirnaerdt holds Belgian nationality. REPORT OF THE EXECUTIVE BOARD 039

42 REPORT OF THE EXECUTIVE BOARD DEVELOPMENTS IN OUR RELEVANCE TO SOCIETY In 2013 business confidence was low in European countries. Companies were hesitant to invest and hire staff, particularly in the first half of the year. Confidence improved in the second half of the year and economic growth gradually picked up. Nevertheless the number of jobs declined in most European countries in At the same time demand from companies and organisation for flexible staff clearly increased. Companies needed a more flexible staffing organisation. Using flexible workers provides the chance to be able to respond to any business opportunities that arise, despite the low level of business confidence. This gives job seekers a bridge to the job market, even more so in times of economic uncertainty. USG PEOPLE OFFERS MANY SOLUTIONS TO LINK EMPLOYERS AND EMPLOYEES USG People offers many solutions to link employers and employees. These solutions enable it to help its clients meet their staffing needs at every stage of the economic cycle so that both clients and employees can continue to grow, regardless of the economic climate. In 2013 an average of flex workers were employed via USG People with around companies and organisations Start People 61,302 60,604 Unique 22,805 24,579 Secretary Plus 1,156 1,424 USG Professionals 1,875 2,180 USG People 87,139 88,787 There was mainly a rise in client demand for efficient flexible solutions, including in-house solutions, payrolling and outsourcing. Demand also rose for sustainable solutions that involve combining training and developing flex workers with a flexible job. Demand for permanent placements was very limited in In 2013 there was a rise in the number of unemployed people above the age of 55. Met Werk, USG People s socially engaged temporary staffing initiative specifically geared towards helping people on benefits find a new job, is addressing this together with Dutch social security benefits organisation UWV with the '55plusWerkt' plan of action. This plan of action was launched in October in the presence of the Dutch minister of Social Affairs and Employment. The objective is to help job seekers above the age of 55 who are on benefits re-enter the workforce. In 2013 USG Restart, a socially driven organisation within USG People, helped more than people with limitations find a job and coached another during employment using its job coaching and mediation skills. The people in question had a mental or physical limitation and would not have had a chance on the job market without professional assistance. By mediating these people, USG Restart is contributing to making our clients more inclusive organisations. The coaches at USG Restart not only assist the workers with a limitation but also see to it that the employers are burdened as little as possible in the process of hiring and integrating the new employee. Please refer to the separate sustainability report for more information on USG People s SR-related activities. These initiatives enabled USG People to provide a relevant contribution to both economic and social prosperity in Value was generated for all our stakeholders.

43 DEVELOPMENT OF ADDED VALUE EMPLOYEES BRANDS TECHNOLOGY accessibility selection solutions NETWORK OF FLEX WORKERS reliable partner career support permanent job flexible job labour conditions development learning sustainable deployment hr expertise assessment selection and matching tools recruitment process online hr solutions hr consultancy hr management temping & secondment outsourcing payrolling MSP, RPO, HRO career support permanent placement CLIENT NETWORK solutions selection accessibility BRANCHES SHARED SERVICE CENTERS USG People s organisation underwent a metamorphosis in The changes ensuing from the strategy sharpen the focus of the entire organisation. Units that had insufficient potential to create attractive added value for the stakeholders of USG People were sold. Scaling up these units created more synergy and generated better opportunities for the respective employees and clients to develop as well as for the stakeholders of the activities being continued by USG People. The focus of the organisation and the resources at its disposal can now be fully employed to further develop our services and our propositions in promising USG People markets. Investments were made in many areas in 2013 to improve and innovate the organisation. The brands were united and the management of the operations was considerably simplified. This reduced the time to market, thus enabling us to offer innovative services quicker and to respond better to changes in the needs of clients and candidates. The Executive Board was reduced from five members to two and corporate management and the corporate staff departments were scaled back considerably which improved decision-making. The investments in the development of our infrastructure and people continued without let-up. Investments made in 2013 included the expansion of our online services and the application of new technology throughout our organisation, such as the international implementation of an innovative new multimedia communication platform. Investments were also made in programmes for talent management and succession planning. These investments enable us to serve our clients and candidates even better and provide more added value. All in all a great deal was done in many areas to promote the development of our services and the solutions we provide in The organisational changes, development of our ongoing activities and investments were focused on increasing added value for all our stakeholders. REPORT OF THE EXECUTIVE BOARD 041

44 OUR BRANDS EACH BRAND APPLIES A CLEARLY DISTINCT BUSINESS MODEL SPECIALISED IN A CERTAIN MARKET SEGMENT In 2013 we decided to group the brands into four star brands: Start People, Unique, Secretary Plus and USG Professionals. The brands are working together more and management has been brought together. Each brand applies a clearly distinct business model specialised in a certain market segment. This enables to optimise the added value for our clients in each market segment from within a highly efficient organisation. In the spring the USG Professionals brand was launched as the overriding brand in the various countries. This brand is the link between all the different fields of expertise and solutions offered by USG People in the Professionals segment. The unification clarifies the positioning and simplifies investments in brand awareness and the services that our professionals provide to clients and candidates. The abovementioned changes are a part of United, a vast project consisting of 36 sub-projects of which 15 were already successfully finalised in Project United will be completed before the end of The project is aimed at simplifying the organisation and making USG People more competitive. OUR EMPLOYEES In 2013 an average of people worked for USG People, excluding staff at divested operations, and three quarters of staff were female. The percentage of women in all levels of the USG People organisation is relatively high, both in senior and lower management positions and among other staff. Staff turnover was 25% in The percentage is traditionally high in our industry and was also influenced by restructurings in the past year. The age breakdown of staff is balanced with about male female 26% 74% 40% of all employees between 30 and 40 and around 30% older than 40, approximately the same percentage as the group of employees under 30. Looking at years of employment, there is also a good spread among the staff. USG People's business principles are incorporated at all operating companies. That means that the associated competencies are also included when recruiting and evaluating employees throughout the organisation. The business principles represent our values and way we work at USG People. They serve as a guide for the desired style of leadership by management and for the services we provide to clients. In 2013 internationally acclaimed Great Place to Work organisation performed a wide-scale study into employee satisfaction. The study showed that the business principles are recognised by employees. This study is the starting point to monitor progress in the coming years. The study will be held for a period of at least three years with respect to all USG People s own employees.

45 Composition of staff COUNTRY AGE Netherlands Belgium France Germany other < > 61 SEGMENT General Staffing Specialist Staffing Professionals YEARS OF SERVICE < > 21 USG People actively promotes employee development and investments were again made in various areas in A new Management Development Programme was set up in cooperation with Vlerick Business School in Leuven. The aim of this programme is to support talent management and succession planning within our organisation. In addition a training programme for senior management was successfully completed in June A great deal of attention was paid to measuring the performance and potential of senior management objectively within the organisation in This involved implementing a web-based assessment process. This gives us a better handle on specific development needs and a better insight into succession issues. In 2014 USG People will continue to invest in the development of its employees. Courses will be accessible to both employees and line managers via web portals from This will lower possible hurdles. Furthermore the onboarding of new employees and important functional training courses need to deploy employees quickly and efficiently will also be facilitated in a web environment from USG People is in regular consultation with employee representatives. In 2013 the Executive Board and the Central Works Council in the Netherlands met 15 times. Two of these meetings were also attended by a member of the Supervisory Board. During the meetings the parties consulted on matters such as the plans relating to the execution of the strategy, including the divestments made, changes to the governance structure and corporate organisation, and project United. Various matters relating to labour conditions were also discussed at the meetings, including pension arrangements and the 2014 remuneration policy. The Central Works Council in the Netherlands met a total of 24 times in In the coming years we want to focus even more on the sustainable deployment of all our employees, with specific attention throughout for training and development opportunities for our staff. REPORT OF THE EXECUTIVE BOARD 043

46 OUR OFFICES Branches DECLINE Start People Unique Secretary Plus USG Professionals USG People The number of branches decreased considerably in 2013 due to the various organisational changes and the execution of the distribution policy. Divestments meant that the number of group branches declined by 193. And the restructuring of the organisation and execution of the distribution policy led to the consolidation of a number of branches. The total number of branches in the ongoing operations has consequently been reduced by 156 branches in 2013 and the network consisted of 797 branches at the end of the year. This number will drop further in the coming years due to the merging of the brands and the implementation of the distribution model. This will not impact the geographic reach of our activities. The function of the physical branches has changes in recent years, due in part to the increased use of technology. The internet and mobile devices are increasingly used to make contact. USG People is adapting its organisation to this trend by using technology more in combination with new types of branches. The large branches are increasingly serving as specialist knowledge centres. Unlike the traditional branches, these branches are not located on the high street but in easily accessible locations. The functions of these branches are aligned to the current needs of clients and candidates alike. In 2013 USG People also combined its headquarters in Almere in one building. The Dutch organisation was previously located in two buildings, meaning that both costs and CO 2 emissions have now been reduced. Shared service centers USG People uses shared service for the facility support and back office activities of the operations in each core country. The shared service centers provide efficient, high-quality, knowledgeintensive support for the field operations. This is achieved by constantly improving, by using lean processes and by sharing best practices. The satisfaction of the operating companies that use shared service centers is measured annually. Satisfaction improved across the board in 2013, resulting in a very high score. Quality improvements were again made within the shared service centers in The level of automation and the knowledge level of the employees were further increased. And the flexibility of the cost structure was increased further, enabling expenses at the shared services to effectively be aligned to the volumes at the operating companies. Large projects were executed in a wide range of areas in In the Netherlands the organisation signed the Horizontal Supervision Covenant with the tax authorities. The covenant supports USG People s tax control framework was also a year in which the head offices in Almere were merged, the USG Professionals locations were rebranded and the revised distribution policy of the operating companies was facilitated by the shared service centers. In Germany the centralisation process was completely finalised in 2013, meaning that all operating companies now use one shared service center in Munich. USG People also reshaped its procurement policy in 2013, embedding sustainability into the processes. For example, USG People already purchased green energy for its head offices and for a large number of its branches in the Netherlands, and in 2013 this was expanded to the entire branch network. This is also being done in the other countries. And in the course of the year more than 90% of the office supplies were purchased sustainably. While focusing on energy usage and lighting, we launched an initiative at the end of 2013 to substantially reduce the CO2 footprint of our furniture. OUR TECHNOLOGY The use of technology plays an increasingly central role in the services provided by USG People. That is why we are constantly investing in the development of technical applications in our business processes and in the services we provide to clients and candidates. In 2013 there were many developments in our online and mobile capabilities and an innovative communication platform was rolled out within the organisation. In April USG People acquired a majority stake in Adver-Online, a Dutch company active in the field of online labour market communications and recruitment software. The acquisition expands USG People s capabilities to further develop its online HR services. Subsequently Unique in the Netherlands already expanded its services in 2013 with the introduction of HROffice the first full cloud solution for all HR-related matters. USG People also invested in accessibility in The telephony infrastructure in the Netherlands and Belgium was replaced by an innovative multimedia communication platform that is purchased as a service and is therefore easy to scale and flexible in costs. This new platform brings USG People in line with the latest trends and enables it to set itself apart from its competitors when it comes to communication. The abovementioned investments provide potential for our services throughout the organisation to develop.

47 THE USE OF TECHNOLOGY PLAYS AN INCREASINGLY CENTRAL ROLE IN THE SERVICES PROVIDED BY USG PEOPLE Organisational expenses before depreciation in millions of euros Unifying the brands and innovations throughout the organisation in the distribution network and in the application of technology result in higher returns on our expertise and growth. This makes it possible to translate our expertise better into added value for all of our stakeholders. And it helps make our organisation more efficient. 90 Q1 Q2 Q3 Q Q1 Q2 Q3 Q ORGANISATIONAL EXPENSES In 2013 the expenses incurred by the organisation were reduced further. Underlying operating costs before depreciation from continuing operations were reduced by 33.6 million, a drop of 8% compared to Due to the fact that the reduction in expenses was larger than the decline in revenue, the expense ratio improved from 18.2% in the fourth quarter of 2012 to 16.9% in the final quarter of Upon completion in 2014, project United (which was announced in the second quarter of 2013) will provide annual cost savings of a total of 38.0 million. A large portion of these savings were achieved in 2013, reducing the annual cost base of the continuing operations by 16.8 million at the start of 2014 compared to the second quarter of 2013 (underlying expenses in the fourth quarter of 2013 were reduced by 4.2 million compared to the second quarter). UNDERLYING OPERATIONAL EXPENSES 2013 MILLION 2013 REVENUE 2012 MILLION 2012 REVENUE DECLINE MILLION year % % st quarter % % nd quarter % % rd quarter % % th quarter % % -6.6 REPORT OF THE EXECUTIVE BOARD 045

48 RISK SECTION RISK MANAGEMENT AND CONTROL SYSTEMS General principles of our risk management Good risk management and seizing opportunities is crucial for USG People to achieve its objectives. Risk management is an integral part of our day-to-day business operations. Chances and threats are identified in a timely manner and managed win the context of our risk appetite. We pursue a policy aimed at safeguarding the continuity of our operations while maintaining a healthy balance between risk and returns. This is evident in the way in which we deal with different types of risk. The risk acceptance for operational risks is limited. With respect to financial risks we pursue a stable financial policy with minimum, manageable risks. And a zero tolerance policy is applied when it comes to compliance with legislation and regulations. Risk management model Regular risk sessions are held in our operations and by the people responsible for the brands to identify the main risks. Measures are taken or adjusted if necessary. Corporate Risk Management receives reports on the status of the risks and measures that have been identified is also reported to Corporate Risk Management on a quarterly basis. The identified risks are then reported to the Executive Board. The Executive Board holds a risk management session annually and organises an update session six months later. The outcome of the sessions held by the Executive Board results in a determination of the main risks for USG People. Plans of action are drafted for these risks, taking into account risk-mitigating measures that have already been taken. This process helps USG People to keep its risks within the acceptance parameters and to safeguard the implementation of risk-mitigating measures. The main risks are discussed with the Supervisory Board on a regular basis. Our internal risk management and control systems The internal risk management and control systems at USG People consist of a combination of tools shown in the diagram below. The systems are based on the COSO ERM model. It is the responsibility of the Executive Board to establish internal risk management systems and to monitor and safeguard their performance and effectiveness. It goes without saying that the completeness of such systems cannot be guaranteed. The elements of the risk management and control systems are explained in more detail below. Governance framework It goes without saying that the framework for USG People is defined by external laws and regulations. We operate in various European countries, relying on the services of local specialists to closely monitor legislation and regulations and to respond to changes in a timely manner. We also apply internal guidelines such as a code of conduct, business principles, whistleblower policy, anti-fraud policy and corporate authorisation matrix. Together these guidelines form the control framework within which USG People aims to achieve its objectives. The current set of guidelines is available for all our employees at all times. New employees are given the guidelines when they commence their employment. The audit department reviews the embedding of the guidelines within the organisation. Objectives and realising them The objectives and strategy are the starting point for our tactical and operational planning and the activities through which we seek to achieve our objectives. The positioning increasingly took shape in 2013 as a result of the divestment of General Staffing activities in six countries and USG Energy, as well as combining brands in our continuing operations. CONTROL BY EXECUTIVE BOARD AND OTHER MANAGEMENT LEVELS business principles and codes of conduct formulating strategy planning & control cycles corporate policy and regulations tactical and operational planning risk management legislation and regulations governance framework operational realisation realisation of objective operational control measures steering mechanisms SUPERVISION AND MONITORING BY SUPERVISORY BOARD, INTERNAL AUDIT DEPARTMENT AND EXTERNAL AUDITOR

49 Steering mechanisms Steering mechanisms are needed to achieve the objectives within the governance framework. These include the financial and operational planning and control cycles, such as the monthly and quarterly reporting, at every level of the organisation. These are supported by manuals, procedures and a detailed accounting manual outlining the principles of valuation and determination of results. All parties involved work closely together to improve the planning and control cycles. Reports are immediately modified if management information needs change to ensure effective governance. Governance by the Executive Board and management The Executive Board is responsible for the proper functioning of the risk management and control model, as described above. This responsibility is partly delegated to line managers and staff managers in the organisation. Supervision and monitoring The risk management and control system is supervised by the Supervisory Board. The Executive Board reports to and is accountable to the Supervisory Board with respect to the design and operation of the risk management and control systems. The Supervisory Board receives information from the internal and external audit function at regular meetings of the Audit Committee. Audits are conducted by USG People s centrally organised internal audit function, which is supported in its activities by a network of local specialists. Assessments carried out by the line management, staff management and internal audit identify possible areas for improvement in our risk management and control systems, which are subsequently implemented and reassessed. This regular assessment process allows USG People to continue to control the risks in a constantly changing environment. RISK MANAGEMENT The main risks and mitigating measures ensuing from the sessions in 2013 are shown below. These risks are related to our targets and strategy. The risks and measures have to be taken into consideration when the other (forward-looking) information in this annual report. Strategic risks Revenue growth and margins are lagging due to limited economic growth / economic crisis The challenging economic market conditions continued in 2013 and partly improved. Optimising the services portfolio with services that add value and further diversifying revenue and the client portfolio took further shape. This is supported by measures aimed at absorbing the pressure on margins by increasing productivity. The cost structure was further optimised and expenses continued to be made more flexible in Unsuccessful execution of focused expansion strategy due to unavailable liquidity Our expansion strategy is aimed at both organic growth and growth through acquisitions. Growth opportunities partly depend on the available liquidity. The geographic scope of the activities declined in 2013, meaning that monitors safeguards the group s liquidity needs. The debt position improved further in the course of the year. Furthermore the financing structure was optimised in the summer with the help of a 60 million subordinated term loan. Inability to adapt distribution model to online developments in time Branches play a prominent role in our current business model and we are currently witnessing a shift towards online activities. The risk is that we do not adapt our business model in time and lose the link our connection with candidates and clients. In that case an expensive distribution model would also remain in place that could not be used efficiently. The effectiveness and validity of our business models are assessed on a regular basis. The implementation of the new front-office system in 2013 helps USG People position itself online. In 2013 USG People also invested in innovating its communication tools to support the activities in the best possible way. Not optimising our use of innovative opportunities Product and process innovation are important for us to achieve our strategic objectives. USG People is an organisation that provides room for innovative ideas about our services, processes and structures. A lack of focus or financial leeway can result in good innovative ideas not coming to fruition. The Executive Board and a team of specialists actively manage the project agenda and set the priorities so that focus and attention is given to the right projects. Rebranding can result in loss of brand value USG People plans to unite a number of brands in its portfolio. This could mean that our clients value our brands differently. USG People protects its brand value by applying a corporate brand policy and using brand books which describes the DNA of the brand in a wide context. The launch of new brand names is accompanied by publicity campaigns aimed at creating brand awareness and brand value. Operational risks Organisational changes lead to internal risks to governance In 2013 USG People implemented a number of organisational changes that carry internal risks relating to (1) changes to the internal governance processes, (2) changes to communication structures, or (3) changes to the responsibilities and authorities of employees. Any failure to manage these areas sufficiently carries the risk that the strategic objectives are not achieved, for reasons including miscommunication, unclearness about responsibilities and internal decision-making. A plan of action REPORT OF THE EXECUTIVE BOARD 047

50 has been drafted to mitigate such internal risks. The plan is being managed directly by the Executive Board. Online IT security USG People s online activities are rapidly growing, as is the technology involved. Cyber attacks and threats of cyber attacks were again often in the news in The IT security specialists at USG People are involved in large IT changes and see to it that IT security is at the desired level. An IT security policy has been drafted and implemented. And an information security board was established in 2013 which is attended by the CFO and CIO representatives of various disciplines such as finance and audit. Technology provides insufficient support for the business Problem-free system support is an essential factor of success. Breakdowns or inferior performance can disrupt our primary processes considerably. In addition, a stable IT infrastructure also ensures high-quality steering information and cost control. USG People uses renowned outsourcing IT partners to keep its risks under control. A uniform front-office system has been developed to reduce the wide array of systems. This system was rolled out in 2013 at one of the business units and will be rolled out further in Shortage of staff Attracting and retaining the temporary workers in demand is risky in times of economic recovery. Staffing shortages can also emerge if insufficient high-quality own staff can be found, developed and retained. We have been able to find and retain employees as a result of our marketing activities, a further boost in our brand awareness and image, international career prospects and personal development programmes. The new front-office system will help facilitate and make it easier to find new candidates also marked the launch of the frontrunner programme for talented employees. This programme is aimed at investing in our own staff. Financial risks Goodwill impairment As a result of changing market conditions combined with the expected results of our activities it may be necessary to write off goodwill, which would have a negative effect on earnings and equity. USG People is constantly focused on achieving the right valuation of reported goodwill and the group performs an impairment test at least on a quarterly basis. That way the need for any impairment is identified in a timely manner. Greater demand on working capital There can be two reasons for a higher demand on working capital. On the one hand a higher borrowing requirement can result from a rise in the balance of trade receivables due to increased economic activity (in times of economic recovery). On the other hand the creditworthiness of clients can fluctuate throughout the cycle. This can lead to a higher DSO and higher expenses if receivables cannot be collected. USG People has implemented credit management systems to authorise credit arrangements with clients as well as to insure debtor risks externally. Our credit management specialists monitor the quality of debts and the changes to the creditworthiness on a regular basis. Important aspects of outstanding trade receivables are discussed during monthly credit meetings. We also use factoring. We actively manage the most important ratios, such as DSO and debtor ageing trends. The sale of a large part of our operations in southern European countries had resulted in a considerable decline in our working capital as well as reduced working capital volatility. Dependency on government subsidies We receive substantial subsidies from the government in two countries. Changes in subsidy legislation may have a negative effect on USG People s earnings. By diversifying the client portfolio we are able to realise price compensation and reduce our dependency on government subsidies. With regard to the financial risks, please refer to explanatory note 3 in the financial statements. Risks related to legislation and regulations Changes to legislation and regulations Labour markets are regulated by international and local guidelines and laws and regulations. In recent years there has been a general trend towards liberalisation of these regulations and towards a more friendly policy towards flexible labour and HR services providers. This benefits the image of flexible labour and improves social acceptance of working for an HR services provider. One the one hand this is a positive development that helps USG People grow. On the other hand demand for our services is influenced by changes in regulations. Contracts and labour conditions for flex workers are based on these regulations and partly determine the cost for our clients, so changes can have an impact on USG People s gross margin. Examples are changes in minimum wage, the introduction of equal pay for flex workers and changes to subsidy schemes. Opportunities for the business and our systems are constantly analysed. Measures are taken based on these analyses to take full advantage of business opportunities. This also includes adjusting our systems so that we continue to comply with legislation and regulations. Compliance with labour law requirements The countries in which USG People operates have different collective labour agreements and often-complex local labour laws. Operational quality management sees to it that collective labour agreements and local labour laws are applied correctly. Corporate staff departments subsequently assess whether regulations are complied with. These measures mitigate the risk of non-compliance with labour law requirements.

51 Statement of the Executive Board regarding the evaluation of risk management and internal control The Executive Board is aware that risk management and control systems, however extensive they may be, are unable to provide absolute certainty that all material inaccuracies, losses, fraud and breaches of laws and regulations can be prevented entirely. The policy of the Executive Board remains focused on constantly monitoring and improving the internal risk management and control systems in order to make the processes as reliable and effective as possible. The Supervisory Board and audit committee are informed on the structure and operation of the internal risk management and control systems. It is the opinion of the Executive Board that the risk management and control systems functioned properly in the year under review with respect to the financial reporting risks. These systems provide a reasonable level of certainty that no material inaccuracies are contained in the financial reporting in the current year. The Executive Board also declares that to the best of its knowledge: The financial statements of USG People give a true and fair view of the assets, liabilities, financial position and profit or loss of the issuing institution and companies jointly included in the consolidation; The annual report of USG People gives a true and fair view of the position at the balance sheet date, the course of events during the financial year of USG People and the companies associated with it, the results of which are included in the financial statements; The principal risks facing USG People are outlined in the annual report. REPORT OF THE EXECUTIVE BOARD 049

52 RESULTS BY SEGMENT After a challenging start 2013 gradually developed into a year with a clearly visible and highly encouraging trend towards recovery. As the year progressed results improved with each quarter, with a turning point to growth being reached in the final months. From the second quarter onwards a positive trend was visible in the revenue development, with a clear improvement at General Staffing and Specialist Staffing in particular. Revenue at Professionals still lagged behind somewhat, although the latter half of the year also saw a gradual narrowing of the year-on-year revenue decline here. in millions of euros Revenue ,354 General Staffing Revenue / 12 1,420-5% Revenue 2013 Revenue / Specialist Staffing 793-6% Revenue 2013 Revenue / 12 Revenue 2013 Revenue / Professionals % 2,254 USG People 2,381-5%

53 EBITA General Staffing EBITA 2012 EBITA-margin % EBITA-margin % EBITA 2013 EBITA 2012 EBITA-margin Specialist Staffing % EBITA-margin % EBITA Professionals EBITA 2012 EBITA-margin % EBITA-margin % EBITA Corporate EBITA 2012 EBITA-margin EBITA-margin EBITA USG People EBITA 2012 EBITA-margin % EBITA-margin % REPORT OF THE EXECUTIVE BOARD 051

54 General Staffing Full-year revenue at General Staffing was down 5% on the previous year. The recovery in demand first emerged at large clients traditionally the segment where demand picks up first in an economic recovery. France led the way in the recovery, with some growth realised as early as September. In the Netherlands and Belgium the turnaround came at the end of the year. Annual revenue at General Staffing was 1,354 million for 2013 against 1,420 million for On balance the gross margin at General Staffing remained virtually stable. In France the gross margin increased due to a reduction in wage tax. At the end of 2012 France introduced the CICE tax credit scheme as a means of stimulating the economy. The scheme reduces the wage costs for those employees on salaries of up to 2.5 times the minimum wage. The tax break concerns a reduction in wage costs which is deducted from company income tax, with the part that is non-deductible being refunded after three years. The increase in revenue at large clients and low revenue from recruitment and selection had a negative impact on the mix. Furthermore there was continued pressure on selling prices. Despite the drop in revenue EBITA at General Staffing rose by 9.1 million compared to last year, reaching 52.9 million compared to 43.8 million a year earlier. The organisational changes implemented resulted in considerably lower costs, which more than offset the drop in revenue. As a percentage of revenue the EBITA margin rose from 3.1% to 3.9%. Annual revenue trend in percentage 2% 0% -2% -4% -6% -8% Q1 Q2 Q3 Q4 in millions of euros Revenue 2013 Revenue / 12 1,354.0 Total General Staffing 1, % Revenue 2013 Revenue The Netherlands 13/ % Revenue 2013 Revenue / 12 Revenue 2013 Revenue / Belgium % France %

55 Specialist Staffing Specialist Staffing recorded a 6% drop in revenue in 2013 compared to the previous year. This segment saw a strong recovery in the course of the year, particularly in the Netherlands, with a number of large operating companies in the Netherlands reaching a turning point to growth as early as the second quarter. Germany saw a more gradual recovery, turning the corner at the end of the year. In Belgium the revenue decline narrowed in the course of the year. Whilst here it went slower than in the other countries, there was a clearly sustained positive trend in the latter half of the year. Specialist Staffing reported annual revenue of 749 million for 2013 against 793 million for Annual revenue trend in percentage 8% 4% 0% -4% -8% -12% Q1 Q2 Q3 Q4 The gross margin at Specialist Staffing was lower as a result of mix effects and price pressure. The pick-up in demand from volume clients and low revenue from recruitment and selection resulted in a lower margin. In addition Germany reported a slight negative effect on the gross margin as a result of wage increases for flex workers arising from the introduction of equal pay in a number of sectors. EBITA for 2013 came in at 33.3 million, down 3.5 million from 36.8 million in EBITA as a percentage of revenue fell slightly from 4.6% to 4.4%. Revenue 2013 Revenue / Total Specialist Staffing % in millions of euros Revenue 2013 Revenue The Netherlands 13/ % Revenue Belgium Revenue / % Revenue 2013 Revenue / 12 Revenue 2013 Revenue / Germany % 8.6 Other 9.0-4% REPORT OF THE EXECUTIVE BOARD 053

56 Professionals The Professionals segment generated revenue of 151 million in 2013, down 10% from 167 million in Recovery tends to come later to this segment than to the staffing segments. Finance and ICT saw the sharpest falls in revenue, with Finance experiencing very weak market conditions in all countries. Furthermore there was a change in the mix of profiles offered by Professionals in 2013, resulting in services being more focused on specialist contracts with highly qualified professionals that can deliver high added value for our clients. This change had a negative impact on revenue in The year-on-year decline in revenue narrowed at the end of the year. The gross margin was lower as a result of lower capacity usage in the areas where demand weakened. In addition there was a negative mix effect due to lower revenue from recruitment and selection and price competition as a result of weak demand in the market. Continued investments designed to support the long-term growth of Professionals resulted in a relatively high cost level compared to the revenue and margin decline. This prompted a fall in EBITA from 11.3 million in 2012 to 3.1million. Annual revenue trend in percentage 0% -4% -8% -12% -16% Q1 Q2 Q3 Q4 in millions of euros Revenue 2013 Revenue / Total Professionals % Revenue 2013 Revenue The Netherlands 13/ % Revenue 2013 Revenue / 12 Revenue 2013 Revenue / Belgium % 3.3 Other %

57 DEVELOPMENT OF FINANCIAL RESULTS Revenue in millions of euros Underlying expenses in millions of euros Underlying EBITA in millions of euros Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q The revenue of USG People reached a turning point to growth in the fourth quarter. Revenue per working day increased quarter on quarter in 2013 and the underlying expenses showed a further decline during the course of the year. As a result underlying EBITA rose in each quarter. The development during 2013 was positive in all countries. CONSOLIDATED RESULTS 1) PRO FORMA NON-RECURRING 2) UNDERLYING (in millions of euros) / 12 Revenue , , % Gross result % Operating expenses % Depreciation % EBITA % Amortisation 3) % EBIT (operating result) % Financial results % Income tax expense % Discontinued activities 4) Minority interests NET RESULT % Gross margin 21.5% 21.9% 21.6% 22.1% EBITA margin 1.1% 2.3% 3.0% 3.0% 1) The pro forma results are based on the results of the continuing operations and exclude the results of the activities divested in 2013 (USG Energy and the General Staffing operations in Spain, Italy, Austria, Switzerland, Poland and Luxembourg). 2) Non-recurring expenses relate to one-off expenses and costs associated with the rollout of Secretary Plus and USG Professionals. 3) Amortisation concerns the depreciation of acquisition-related intangible assets, including goodwill. 4) The result from discontinued activities includes the net operating result of USG Energy. REPORT OF THE EXECUTIVE BOARD 055

58 REVENUE USG People generated 2013 revenue of 2,254.3 million, down 5.3% on the previous year (2012: 2,380.7 million). Acquisitions had virtually no impact on this. There was a clear improvement in the revenue trend in 2013, with the downward trend seen in 2012 gradually reversing into an upward line. The final quarter saw an end to the revenue decline and the fourth quarter as a whole even saw a cautious return to growth. The recovery first appeared at our early-cyclical business units, which started seeing signs of improvement as early as the second quarter. By the third quarter there was a clearly visible positive trend and the recovery spread. A number of specific sectors experienced exceptionally weak demand for staff in Demand for medical and financial profiles was very low across the board. In addition the revenue development at USG Professionals and Secretary Plus still lagged behind the more general staffing activities. These brands tend to recover later in the cycle, as does the revenue from recruitment and selection, which was down more than 16% on the previous year. These brands did see an improvement in the latter half of the year. REVENUE BY COUNTRY USG People revenue growth vs last year 10% 5% 0% -5% -10% Breakdown of revenue by country Netherlands Belgium France Germany Other countries -15% -20% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q revenue growth by country vs last year 10% 0% -10% -20% The picture was more or less the same in all the countries. France was the first to turn the corner, realising revenue growth as early as the third quarter, a trend that strengthened in the fourth quarter. The Netherlands and Germany followed in the fourth quarter, with both countries seeing a remarkably strong recovery for Unique in the office segment in particular. In the technical segment the trend was more gradual, with the same applying to USG Professionals and Secretary Plus. Belgium also saw an improvement but recovery here was slower than in the other countries. At Start People the recovery was to a certain extent in line with the market although the specialists and professionals still lagged somewhat. -30% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q DE NL FR BE Full-year revenue in the Netherlands fell 3.7% to 976 million (2012: 1,014 million). In Belgium revenue dropped 8.7% to 585 million (2012: 640 million). In France 2013 revenue equalled 464 million (2012: 482 million). In Germany revenue amounted to 222 million (2012: 239 million) a decline of 7.1% from the previous year.

59 (in millions of euros) Revenue The Netherlands Revenue /12 1, % Revenue Belgium Revenue / % Revenue 2013 Revenue /12 Revenue 2013 Revenue / France % 222 Germany % Revenue 2013 Revenue /12 Revenue 2013 Revenue / 12 7 Other countries % 2,254 USG People 2, % REPORT OF THE EXECUTIVE BOARD 057

60 Breakdown of revenue by segment General Staffing Specialist Staffing Professionals (in millions of euros) At a segment level General Staffing turned in the best performance with a 4.7% drop in full-year revenue. The strong revenue performance of Start People in France and the recovery in the early-cyclical sectors in the Netherlands and Belgium resulted in a return to growth in the final quarter. The decline in revenue compared to the previous year narrowed from the third quarter and the final quarter saw growth of 1.4%. Specialist Staffing started to see a narrowing of the revenue decline as early as the first quarter, with the trend continuing with each quarter. Creyf s and Unique in the Netherlands and Germany in particular saw a continuing strong trend towards recovery. The improvement was especially noticeable in the industrial and administrative sectors, although demand for technical profiles and management support roles remained weak. In the fourth quarter Specialist Staffing achieved growth of 3.1% compared to a year earlier. Professionals reported a 9.7% drop in revenue compared to Recovery tends to come to this segment later in the cycle. In addition there was an exceptionally weak demand for financial profiles, which USG Professionals supplies in the Netherlands, Belgium and France. The second half saw a gradual improvement across the board, following a low in the second quarter. In the final quarter revenue at Professionals was down 8.2% on the year-earlier level. Revenue ,354 General Staffing Revenue Specialist Staffing Revenue / 12 1, % Revenue / % Revenue Professionals Revenue / % REVENUE BY SEGMENT Revenue ,254 USG People Revenue / 12 2, %

61 GROSS RESULT 23% 22% 21% 20% In France there was a positive effect from a reduction in wage tax. At the end of 2012 France introduced the CICE tax credit scheme as a means of stimulating the economy. The scheme reduces the wage costs for those employees on salaries of up to 2.5 times the minimum wage. The tax break concerns a reduction in wage costs which is deducted from company income tax, with the part that is non-deductible being refunded after three years. On balance the price effects were neutral, with the negative price effects being offset by the CICE scheme in France. Q1 Q2 Q3 Q4 The underlying gross result fell to million in 2013 from million in As a percentage of revenue the gross margin equalled 21.6% in 2013, down 0.5% on 2012 (22.1%). In the second quarter the gross margin was lower due to an unfavourable effect from public holidays. The gross margin rose in the third and fourth quarters, mainly due to an increase in CICE in France and in the final quarter also due to a repayment of the occupational disability insurance contribution in the Netherlands. The gross margin level declined as a result of mix and price effects. The mix effects were negative in There was a sharp drop in revenue with no immediate cost price recognition; all costs here are fully included in the operating costs and the gross margin on this revenue equals 100%. A drop in this revenue has a relatively large impact on the gross margin of the group. This concerns the revenue from recruitment and selection, re-integration in France (USG Restart) and the call centre activities in the Netherlands and Belgium. In addition there was an increase in revenue at large clients, which are supplied at relatively low margins. This also had a negative mix effect on the group margin. In addition to the mix effects there were also price effects, both positive and negative. There was pressure on prices for many large tenders and there was increased demand for low-cost solutions such as in-house and payrolling concepts. In Germany the gross margin fell due to the introduction of equal pay at the end of While the increased wage expenses could be almost wholly charged on to the clients, no margin could be realised on them. On balance this resulted in a lower gross margin on the total cost price. In 2013 a one-off amount of 2.6 million was recognised in the cost price in connection with the creation of a reserve for own risk bearer status for sickness benefits. In 2012 a one-off amount of 3.8 million was recognised in the cost price relating to possible pension obligations for seconded flex workers. The pro forma gross result was million in 2013 compared to million in OPERATING EXPENSES Underlying operating costs including depreciation amounted to million in 2013 (2012: million). Costs fell by 35.9 million or 7.9% in 2013 compared to Simplifications in the organisation, a more flexible cost structure and the grouping of the brands under four star brands resulted in a further structural improvement in the cost base. In 2013 the fall in underlying costs was once again greater than the drop in revenue, which amounted to 5.3%, meaning that costs as a percentage of revenue also fell. In 2013 underlying costs including depreciation amounted to 18.6% of revenue (2012: 19.1%). (in millions of euros) / 12 UNDERLYING COSTS Operating expenses % Depreciation % Underlying costs including depreciation % NON-RECURRING COSTS Operating expenses Depreciation Non-recurring costs including depreciation Pro forma operating expenses % REPORT OF THE EXECUTIVE BOARD 059

62 Both in 2013 and in 2012 there were non-recurring costs as well as underlying costs. These costs, some of which were related to organisational improvement programmes, on balance amounted to 39.5 million in In addition to the improvement programmes a 15.0 million charge was recognised to cover the merger of the office buildings in Almere. Costs also included an amount of 5.6 million for the rollout of Secretary Plus and USG Professionals. Furthermore there was a non-recurring gain of 10.8 million due to a final determination of legal claims in Germany. In 2012 nonrecurring costs amounted to 12.7 million. maturing of interest rate derivatives in July In addition the debt position was lower in 2013 due to the divestments in the first half of the year. Pro forma financing expenses in the income statement were lower due to unrealised value adjustments and revaluations. The pro forma financial result was -9.6 million in 2013 against million in (in millions of euros) Pro forma operating expenses including the non-recurring costs mentioned above fell by 1.9% to million (2012: million). EBITA Underlying EBITA in 2013 was 66.5 million (2012: 70.3 million). EBITA was lower than in the previous year due to the drop in both the revenue and the gross margin. The reduction in the underlying costs was greater than the decline in revenue, meaning that both the lower revenue and the lower gross margin were entirely offset by the lower costs and the EBITA margin came in at 3.0% of revenue (2012: 3.0%). Pro forma EBITA was lower due to the higher non-recurring costs. Including these costs EBITA was 24.5 million against 53.8 million in the previous year. Underlying financing result Unrealised value adjustments to derivatives Revaluation of earn-outs Accelerated amortisation of finance expenses Pro forma financial result INCOME TAX Underlying income tax for 2013 was million (2012: 17.9 million). The 2013 pro forma tax included an 14.8 million charge for impairments of deferred income tax assets (2012: 1.6 million). In 2013 pro forma income tax was million (2012: million). (in millions of euros) (in millions of euros) Underlying EBITA Non-recurring costs in gross profit Non-recurring operating costs Underlying income tax Impairment of deferred income tax assets Tax effect of non-recurring results Pro forma income tax Pro forma EBITA AMORTISATION OF ACQUISITION-RELATED INTANGIBLE ASSETS Underlying amortisation of acquisition-related intangible assets dropped to 13.5 million in 2013 (2012: 15.8 million). Reported amortisation in both 2012 and 2013 included an amount of 0.7 million for accelerated depreciation of recognised brand rights in connection with a brand name change at Professionals. In 2012 an amount of million was recognised for impairments, mainly goodwill impairments. FINANCIAL RESULT The underlying financial result improved to million in 2013 (2012: million). Expenses fell as a result of the repayment of the subordinated convertible loan in October 2012 and the NET RESULT FROM DISCONTINUED ACTIVITIES AND DIVESTMENT OF ACTIVITIES (in millions of euros) Net result of discontinued General Staffing activities Net operating result of USG Energy Result from the sale of USG Energy 28.7 Result from the sale of Inter Re 5.6 Net result from discontinued activities and divestments The net result from the discontinued activities was -7.8 million in 2013 (2012: million). This concerned the results of the

63 activities of USG Energy and the General Staffing operations in Spain, Italy, Austria, Switzerland, Poland and Luxembourg that were divested in USG Energy s result for 2013 equalled 30.5 million (2012: 6.9 million), consisting of a book gain on the sale of 28.7 million in 2013 and the operating result of USG Energy up to the date of the sale, amounting to 1.8 million (2012: 6.9 million). In accordance with IFRS 5 the operating results of USG Energy for 2012 and the first three months of 2013 have not been recognised separately in the income statement under result from discontinued activities. The result of the discontinued General Staffing activities was million (2012: million). This concerns both the result from the sale and the net result realised during 2012 and the first six months of In accordance with IFRS 5 the net result from the divested General Staffing activities realised during the first six months of 2013 has been recognised in the financial statements as result from discontinued activities. The comparative figures for 2012 have been adjusted accordingly. Furthermore the result from the sale of Inter Re, which was divested in 2012, has been included in the result from the sale of activities in The result from this sale was 5.6 million. NET INCOME ATTRIBUTABLE TO EQUITY OWNERS OF THE COMPANY (in millions of euros) Underlying net income Non-recurring results Impairment of acquisition-related intangible assets Unrealised value adjustments to derivatives Net result from discontinued activities Revaluation of earn-outs Accelerated amortisation of financing costs Non-recurring tax effects Reported net income Underlying net income rose to 21.0 million from 16.3 million in Reported net income was million in 2013 (2012: million). The reported results were impacted by nonrecurring effects both in 2013 and CASH FLOW The operating cash flow amounted to 23.4 million (2012: 27.5 million) and was lower than last year due to the lower revenue and non-recurring costs for the organisational improvements implemented. Furthermore in 2013 there was no cash realisation of the tax credit (CICE scheme) in France; under the terms of the scheme settlement will largely take place in three years time. Income tax paid was 20.9 million lower than the previous year. The change in working capital was -4.5 million, virtually unchanged from the previous year (2012: -4.9 million). The amount of trade receivables sold rose by 21.3 million in 2013 to million (2012: 99.8 million). The amount of investment was slightly down on last year and equalled 17.8 million (2012: 18.7 million). Cash flow in 2013 was strongly influenced by acquisitions and divestments and on balance equalled 77.2 million (2012: million). Interest expenses paid were down, mainly as result of lower costs on interest rate derivatives. The interest rate derivatives whose results were recognised in the income statement matured in July In accordance with its long-term dividend policy, USG People distributed a dividend in a choice of cash or ordinary shares in 2013, resulting in a cash dividend payment of 5.0 million (2012: 6.4 million). CONDENSED CASH FLOW STATEMENT (in millions of euros) DIFFERENCE Operating cash flow Investments Acquisitions and divestments Interest expenses paid Dividend paid Change in borrowings Net cash flow from discontinued activities Change in cash and cash equivalents REPORT OF THE EXECUTIVE BOARD 061

64 BALANCE SHEET CONDENSED BALANCE SHEET (in millions of euros) DIFFERENCE Fixed assets Income tax assets and liabilities Working capital Shareholders equity Subordinated borrowings Net debt to financial institutions Other financial debt Derivative financial instruments Provisions Balance sheet total 1, , In 2013 the balance sheet total fell million to 1,189.6 million (2012: 1,344.7 million). The decline was mainly due to the divestments effected in the course of the year. The assets of the divested business units, excluding cash and cash equivalents, totalled million. On balance working capital fell by 33.5 million in 2013, with the decline almost wholly attributable to divestments. Working capital sold relating to the divested business units equalled 40.0 million. Excluding divestments working capital increased by 6.5 million. Trade and other receivables fell by million or 29.8% compared to a year earlier. The decline was mainly attributable to the divestments, whose trade and other receivables sold totalled million. In addition there was a 21.3 million increase in outstanding trade receivables sold (factoring). Excluding these effects trade and other receivables increased by 14.6 million. Accounts payable and other liabilities fell by 85.3 million; the divestments had an impact of million on this. Excluding divestments accounts payable and other liabilities fell by 13.1 million. Shareholders equity fell by 29.9 million in 2013 to million (2012: million). The decline was mainly due to the addition of the net result of million and the cash dividend distribution of 5.0 million in FINANCING Net debt fell by 66.0 million to million (end-2012: million). The subordinated loan of 18.2 million at end- 2012, relating to the remainder of a loan from Stichting Start, was fully repaid in The financing structure was adapted to the new organisation in A new subordinated loan was granted with a nominal value of 60 million and maturing on 31 December On balance subordinated borrowings increased by 39.9 million in 2013, from 18.2 million to 58.1 million. Furthermore, following the divestments in 2013, the syndicated credit facility was adapted to the new situation and the needs of the organisation and was consequently lowered from 700 million to 500 million. As a result the financing structure once again has a balanced composition which will enable it to comfortably facilitate the operational and strategic plans of USG People in the coming years. Following the organisational changes three new limits were set in the banking covenants: a maximum limit of for the total leverage ratio (net debt / underlying EBITDA), a maximum limit of 3.0 for the senior leverage ratio (net bank debt excluding subordinated borrowings / underlying EBITDA) and a minimum requirement of 3.5 for the interest coverage ratio (underlying EBITDA / interest expenses). 1. The maximum limit for the total leverage ratio has been set at 3.75 from 23 September 2013 to 31 December 2014, 3.5 from 1 January 2015 to 30 June 2015, 3.25 from 1 July 2015 to 31 December 2015 and 3.0 from 1 January 2016 to 31 December On balance income tax assets and liabilities decreased by 4.9 million due to impairments of income tax assets. In addition provisions increased by 13.5 million due to the provisions taken for the announced organisational changes.

65 At the end of 2013 net debt was well within the permissible limits set by the banking covenants. The total leverage ratio at end-2013 was 2.3 (maximum limit: 3.75), the senior leverage ratio was 1.6 (maximum limit: 3.0) and the interest coverage ratio was 5.8 (minimum requirement: 3.5). DIVIDEND USG People aims to achieve continuity in the distribution of dividend. The long-term dividend policy is based on a dividend distribution of one-third of net income before amortisation and adjusted for the effects of unrealised valuation results on interest rate derivatives. In 2012 a dividend of 0.12 per share was distributed in line with this policy. The dividend was offered to shareholders in a choice of cash or shares; an amount of 5.0 million was paid out in cash dividends and 767,802 shares were issued for the stock dividend. The company realised a negative net result in the 2013 financial year, which means that under the normal definition of the dividend policy no dividend would be distributed for the financial year. However, the 2013 result was distorted by substantial nonrecurring effects such as the book results on divested business units and provisions taken for organisational changes. The Executive Board aims for a stable dividend distribution provided that sufficient cash has been generated and there is sufficient confidence with regard to the targets set for the debt position. In 2013 net debt was lowered by 66.0 million. In addition there was an improvement both in market conditions and the results of USG People. At end-2013 the leverage ratio stood at 2.3. Whilst this is above the strategic target of 2.0, in light of the lower absolute debt position and the recovery underway in our markets it was decided to adjust for the one-off effects in the result in determining the 2013 dividend proposal. The normalised net result before amortisation and goodwill impairment and adjusted for the effects of unrealised value adjustments to interest rate derivatives was 33.6 million. Under the dividend policy one-third of this is available for dividend distribution. Divided by 80.5 million shares this equates to a dividend distribution of 0.14 per share. At the General Meeting of Shareholders on 8 May 2014 the Executive Board will propose a dividend of 0.14 per ordinary share, payable either in cash or in shares. DIVIDEND CALCULATION (in thousands of euros) 2013 Net result for ,058 Book gain from divestments 10,662 Non-recurring results 42,072 Tax on non-recurring results -13,434 Downward value adjustments to deferred tax assets 14,765 Normalised net result 28,007 Amortisation of acquisition-related intangible fixed assets 14,244 Unrealised value adjustments to interest rate derivatives -6,228 Tax effects -2,373 Result before determination of dividend 33,650 Dividend per share for 2013 financial year (in euro) 0.14 REPORT OF THE EXECUTIVE BOARD 063

66 OUR FINANCIERS The financiers of USG People realised an attractive return in The market capitalisation of the company rose sharply during the course of the year and in May a dividend of 12 cents per share was distributed to the shareholders. At the same time the risk of an investment in USG People was diminished in various aspects. The debt position was further reduced while the economic outlook improved slowly but surely. Furthermore following the divestments in 2013 USG People has an improved profile and the financing structure has been optimised and adapted to the new situation. This involved a reduction of the available credit facilities from 700 million to 500 million and the extension of a 60 million subordinated loan by the syndicate of banks. This has resulted in a comfortable solvency position and ample funding ratios. In addition the interest rate derivatives concluded in 2008 were settled on the expiration date of the contract. An amount of 6.2 million was paid on these interest rate derivatives in The settlement results in a substantial reduction in interest rate expenses and creates extra room in the interest coverage ratio. With a view to managing the cash flow and interest rate risk three new interest rate derivative contracts were concluded in December RESULT PER SHARE The result per share is based on the result before amortisation and impairment of acquisition-related intangible assets and before unrealised value adjustments to interest rate derivatives. In 2013 there were substantial non-recurring effects on results due to the sale of business units and the costs of restructuring projects. These non-recurring effects give a distorted view of the underlying profitability of the company s continuing operations. That is why results per share are based on the underlying results from continuing operations. The results for 2012 have not been adjusted to reflect this. We believe that this provides an accurate picture of the continuing operating results (the operating results of the continuing business operations). (in millions of euros) 2013 Net income Non-recurring net results including result on disposals 52.7 Amortisation and impairment of acquisition-related intangible fixed assets 14.2 Unrealised value adjustments to derivatives -6.2 Income tax -1.0 Net result for calculation of result per share 33.6 FINANCING STRUCTURE (in millions of euros) Share capital Closing price of USG People share (in euro) Market capitalisation The result per share is calculated based on the average number of shares. For 2013 the result per share was 0.42 (2012: 0.35). INFORMATION PER SHARE BASED ON AVERAGE NUMBER OF SHARES SUBORDINATED BORROWINGS Stichting Start Syndicate of banks (in euro) * OTHER LOANS Net bank debt Interest rate derivatives Trade receivables sold RATIOS Leverage ratio Senior leverage ratio Interest cover ratio Earnings per share Operating cash flow Net income Dividend * 2012 is not adjusted for dilution as a result of the distribution of stock dividend

67 VOLUME AND SHARE PRICE DEVELOPMENT The ordinary shares of USG People are listed on NYSE Euronext Amsterdam, where options on the shares are also traded. The shares closed the year with a share price of 9.69, representing a 60% increase in the share price in The share prices of large listed HR services providers clearly outperformed the market as a whole in The AEX index rose 17% in the course of the year and the Amsterdam Midkap index (AMX), which includes USG People, increased 18%. by a rise in investor confidence in the recovery of the European economy and the publication of better-than-expected thirdquarter results. After the high reached in November the share price stabilised and fell somewhat to close the year at In 2013 the number of outstanding shares rose by 767,802 to 80,483,677 shares. The increase was the result of the optional dividend which was partly distributed in shares. USG People took important strategic steps in 2013, including sharpening its focus, uniting its brands and further reducing costs. This did not result in an improvement in the share price in the first half of the year. USG People s share price development was hampered by uncertainty about the economy in the European countries and associated staffing markets in which USG People operates. On 24 June the share price closed at 5.00, the lowest level of the year, after which a positive trend gradually set in. The share price rose sharply from the end of August and reached a high of on 12 November. The improvement was fuelled NUMBER OF SHARES OUTSTANDING NUMBER Ordinary shares ,715,875 Stock dividend distributed 767,802 Ordinary shares ,483,677 Share price development of USG People in 2013 compared to AEX and AMX index and peers MARCH 30 JUNE 30 SEPTEMBER 31 DECEMBER USG People Randstad Adecco ManpowerGroup Kelly Services AEX Index AMX Index REPORT OF THE EXECUTIVE BOARD 065

68 The number of shares owned by USG People founder Alex Mulder remained virtually unchanged from last year. His 16,016,645 shares represent a stake of 19.9% in USG People. 100% of USG People s ordinary shares are in free float. Trading volumes increased due to improved market conditions in The number of shares traded was 25 million, up 27% on The volume of shares traded was 0.8 billion in 2013, a 40% increase from the year before. TRADING VOLUMES Number of shares in millions Trading volumes in millions of euros ,032 1,447 1,250 DISCLOSURE OF MAJOR HOLDINGS Under the Dutch Act on the Disclosure of Major Holdings in Listed Companies the following interests were declared on 31 December 2013: Alex Mulder 19.9% Dimensional Fund Advisors, L.P. 3.6% JPMorgan Asset Management U.K. Limited 3.2% Norges Bank 3.1% INVESTOR RELATIONS Two analyst meetings were held in 2013, one at the presentation of the 2012 annual results and the other at the 2013 half-year results. The first-quarter and third-quarter results were presented and discussed in a conference call. These gatherings were accessible via webcasts from the USG People website. In the interests of direct contact with shareholders and investors, in 2013 roadshows and conferences were organised in the Benelux, the United Kingdom, the United States and France. Shareholdings of Executive Board and Supervisory Board members Executive Board Rob Zandbergen 87,486 shares Leen Geirnaerdt 3,691 shares Supervisory Board Alex Mulder 16,016,645 shares The number of media contacts and analysts covering our company remained about stable in USG People is currently followed actively by around 15 analysts representing most major brokers and securities houses relevant to USG People. Analyst presentations: 4 Investor conferences Amsterdam Brussels London New York Paris Roadshows Belgium Netherlands France UK US

69 SUMMARY OF STRATEGIC EXECUTION In 2013 USG People took material steps in the execution of its strategy. Looking at the strategic objectives, progress was mainly achieved in the first objective: strengthening the basis. The sale of units that are no longer within the scope of our strategy was completed in 2013 and the business models of the continuing activities were shaped more competitively. These divestments and organisational changes have resulted in a better starting point for the future of our organisation. Progress was also made within the framework of our financial objectives. The profit potential improved due to further cost reductions and flexibility as well as a strengthening of our commercial effectiveness. Furthermore our debt position improved as a result of the proceeds from divestments. Together this provides USG People with a solid starting point to further shape its strategic growth and profitability objectives. THESE DIVESTMENTS AND ORGANISATIONAL CHANGES HAVE RESULTED IN A BETTER STARTING POINT FOR THE FUTURE OF OUR ORGANISATION GEOGRAPHIC SCOPE In June USG People sold the general staffing activities in Spain, Italy, Austria, Switzerland, Poland and Luxembourg. These activities had insufficient potential to continue independently in their current markets and no longer fit in the strategic framework that was revised in That meant that the geographic spread of the General Staffing activities was reduced from nine to three countries. The geographic reach of Start People and Unique following the divestments is concentrated on four countries in which the HR markets have fundamentally good prospects for growth and healthy returns. The abovementioned divestments made in 2013 mean that USG People can fully focus its attention and resources on strengthening the business units with fundamentally good prospects for the future. The geographic scope of General Staffing (Start People) now includes three countries, the Netherlands, Belgium and France. The positioning in these regions provides Start People with a good basis on which to further develop its proposition, as well as Unique which is positioned in the Netherlands, Belgium and Germany. USG Professionals and Secretary Plus have been rolled out to countries outside of the four core countries in the past few years. These countries are expected to be fundamentally good markets for these high-quality service concepts. ALIGNED BUSINESS MODELS Aligning the business models to the four star brands results in a distinct proposition for each market segment. This enables each brand to provide maximum added value in the market segment it targets. SEGMENT STAR BRAND NL BE FR DE AT CH IT LU General Staffing Start People Specialist Staffing Unique Secretary Plus Professionals USG Professionals REPORT OF THE EXECUTIVE BOARD 067

70 IN 2013 USG PEOPLE TOOK MATERIAL STEPS IN THE EXECUTION OF ITS STRATEGY BREAKDOWN OF STRATEGIC MEASURES TAKEN IN 2013 BY OBJECTIVE 1) STRENGTHEN EXISTING LEADING POSITIONS disposal of USG Energy more focused positioning due to divestments in countries with limited scale adjustment to senior management structure and governance of field organisations unified brands in four star brands (launch of project United) improved cost structure innovated distribution channels investment in technology 2) INCREASE EXPOSURE TO GROWTH MARKETS launch of USG Professionals 3) EXPAND HIGH-VALUE CREATING CONCEPTS launch of USG Professionals acquisition of Adver-Online conversion to in-house and payrolling concepts launch of online applications (HROffice) AVERAGE EBITA MARGIN OF 6% THROUGHOUT THE CYCLE (FROM 2014) lowered costs more flexible cost structure improved revenue mix due to sale of activities with low returns DEBT RATIO 2.0 reduced net debt by 66 million

71 In 2013 the finance facilities were adapted to the new situation. The syndicated bank facilities were lowered from 700 million to 500 million. And a 60 million subordinated loan was granted by the existing syndicate of banks. This brought the finance structure back into the balance desired. The remainder of the Stichting Start subordinated loan ( 18 million) was fully repaid in NEXT STEPS IN STRATEGIC EXECUTION USG People s activities have become less fragmented and the organisation has been simplified as a result of the transition achieved in Investments in the company s strategic ambitions for the continuing operations can therefore be more focused, unified and influential. Project United, which was launched in the second half of 2013, gives each of our four star brands Start People, Unique, Secretary Plus and USG Professionals a clear and distinct focus. This project will carefully be further executed in 2014 and completed in the course of the year. This provides a solid basis on which we can achieve new growth and will find innovative solutions that will help our clients improve their organisation. In 2014 a great deal of attention will be focused on effectively executing project United, further improving the company s debt position and achieving higher returns by maximising our improved commercial effectiveness as a result of the organisational changes. Improvement programmes remaining ongoing in order to continue to achieve operational excellence. We aim to strengthen our existing position through product and process innovation. Project United has improved the time to market and our commercial effectiveness, so that we can win market share. OUTLOOK At the beginning of 2013 various macroeconomic signs already indicated that the recession had bottomed out. Business and consumer confidence was still weak at the start to the year but started to recover later. Midway through the year there were signs of clear improvement as well as a rise in demand for flexibility in company staffing organisations in the course of the year. A positive trend developed in demand for our services and this trend continued at the start of This provides a good starting point for this year, with economic recovery expected to gradually continue. In 2013 we adjusted our organisation which made our position more focused and reduced our cost level significantly. We will continue to shape the combination of our four star brands in 2014 and further increase our competitiveness in the process. Our reshaped organisation will enable us to focus our attention and resources on markets in which we hold a strong position. We will continue to invest in the development of our infrastructure and the services we provide to clients and candidates in these markets. As a result of the transformation USG People will be well positioned to further develop and benefit from the attractive growth and profit potential these markets have to offer as economic recovery becomes more sustained. Furthermore the development of our added value and an ongoing trend among companies to seek more flexibility in their staffing organisations offer good prospects for structural demand for our services, also in times of moderate economic growth. REPORT OF THE EXECUTIVE BOARD 069

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73 SUPERVISORY BOARD MEMBERS PROFILES 1 CEES VEERMAN 1949, Dutch Chairman first appointed in 2010 current term Interim chairman of the remuneration and appointments committee Cees Veerman has chaired the Supervisory Board of USG People N.V. since 1 March He was the Dutch minister of Agriculture, Nature and Food Quality from 2002 to 2007 and CEO of Bracamonte B.V. until September Cees currently holds professorships at the universities of both Tilburg and Wageningen. In addition, he sits on the supervisory boards of companies including Rabobank Nederland, Barenbrug Holding B.V., Koninklijke Reesink N.V. and Ikazia Ziekenhuis Rotterdam, and is a member of the supervisory committee of research institute Deltares. He is also a member of the executive committee of the Netherlands Organisation for Scientific Research (NWO). 1 2 RINSE DE JONG 1948, Dutch first appointment in 2010 current term Chairman of the audit committee Rinse de Jong joined the USG People N.V. Supervisory Board on 20 December A registered accountant, Rinse was most recently employed as Chief Financial Officer of Essent, where he was also responsible for risk management and IT. He is interim chairman of the supervisory board of NV Nederlandse Gasunie and sits on the supervisory board and chairs the audit committee of Enexis Holding N.V. He is also chairman of the supervisory board of Bakeplus Holding B.V. Rinse is a member of the Board of Supervision of the Guarantee Fund for the Health Care Sector (Waarborgfonds voor de Zorgsector) and an executive committee member of the foundation Stichting Aandelenbeheer BAM Groep and of the Foundation for the holding of priority shares in the public limited liability company Wereldhave. 3 MARIKE VAN LIER LELS 1959, Dutch first appointed in 2002 current term Member of the audit committee Marike van Lier Lels has been a member of the USG People N.V. Supervisory Board since December She graduated from Dordrecht technical college in 1983 and from Delft Technical University in She subsequently held a number of management positions with Royal Nedlloyd, Van Gend & Loos, Deutsche Post Euro Express and Schiphol Group. Marike is a member of the supervisory boards of various companies including KPN, Reed Elsevier, Eneco and TKH Group, and a member of the executive board of Vereniging Aegon. She also chairs the Board of Supervision of the Netherlands Society for Nature and the Environment, is a member of the Council for the Environment and Infrastructure, a member of the Central Planning Committee of the Dutch Central Planning Bureau and until 2012 she was a member of the Dutch Advisory Council for Science and Technology Policy (AWT). 4 ALEX MULDER 1946, Dutch first appointed in 2006 current term Member of the remuneration and appointments committee Alex Mulder founded Unique Uitzendburo in 1972, which by consequence makes him the founder of USG People N.V., of which he was chairman and CEO until At the General Meeting of Shareholders in 2006 Alex was appointed to the USG People N.V. Supervisory Board. Alex is also a delegated director of Amerborgh International N.V., a management company whose activities include investing and acquiring stakes in promising (young) companies as well as in art and culture. He is also chairman of Stichting AM Foundation. REPORT OF THE SUPERVISORY BOARD 071

74 REPORT OF THE SUPERVISORY BOARD The Supervisory Board consisted of five people until the General Meeting of Shareholders in May 2013: Cees Veerman (chairman), Joost van Heyningen Nanninga (chairman of the remuneration and appointments committee), Rinse de Jong (chairman of the audit committee), Marike van Lier Lels and Alex Mulder. The term of Joost van Heyningen Nanninga expired in May 2013 but no successor was immediately appointed, so that the Supervisory Board consisted of four people for the rest of the year. After the end of his term Joost van Heyningen Nanninga continued to share his knowledge with the company as an advisor and he will continue to do so until such time as a successor has been appointed. We wish to thank him for his contributions to the Supervisory Board in the past 12 years. His knowledge of labour markets and human capital in particular were of great added value. We are pleased to say that the outlook for USG People truly changed in The realisation of strategic changes in the organisation and more positive expectations for the economy in European countries have resulted in a more favourable outlook. In 2013 USG People forged a transition in its organisation. A number of essential steps were taken in the course of the year to realise the strategy. These included strengthening the company s positioning through divestments and merging the brands. The company invested in innovation, for example in ICT and online applications for the distribution network. The organisation was simplified and costs were structurally lowered. Debt was also lowered and the financing structure was brought in line with the changed organisation. In the course of the year the picture in the markets gradually improved. The first, cautiously positive signs in the second quarter developed into a positive trend pretty much across the board. At the end of the year USG People had turned a corner to growth. Our starting point for 2014 is therefore considerably more favourable than the situation a year ago. ACTIVITIES In 2013 the Supervisory Board held eight plenary meetings, in accordance with the fixed schedule, three of which by conference call. Two additional meetings were held, one by conference call to discuss the sale of the General Staffing activities in six countries and one plenary meeting to discuss project United, which kicked off in Extensive consultation also took place outside of the meetings to discuss the changes in the senior management structure. The chairman was in close contact with the CEO in the periods between the meetings. The chairman is the first point of contact within the Supervisory Board for the CEO with regard to discussions about current issues and about the general state of affairs. Meetings are regularly held at a USG People business unit because the Supervisory Board, in its supervisory role, wants to monitor the business activities closely. In this context a meeting was held at the Unique flagship store in Amsterdam in In addition the Supervisory Board is in regular contact with the Works Council and with employees from various levels of the organisation. Discussions within the Supervisory Board were predominantly based on documents and presentations provided by the Executive Board. In preparation, many of the topics were discussed in advance in meetings of the audit committee or the remuneration and appointments committee. At the meetings the Supervisory Board was informed about a number of recurring topics, including the leadership of the Executive Board, the interests of the various stakeholders, the progress made in the execution of the strategy, developments in the markets in which USG People operates, operational and financial performance, and the outlook. Other recurring themes on the agenda were corporate finance, the monitoring of risk management and the IT strategy. ATTENDANCE In 2013 the members of the Supervisory Board attended virtually every meeting. The chairman of the Supervisory Board and the chairman of the audit committee were unable to attend one meeting for scheduling reasons. Instead they provided their input in advance and designated another member of the board to assume their duties. MEETINGS OF THE SUPERVISORY BOARD In 2013 the Supervisory Board spoke at length about the strategic steps taken in 2013 and about the progress achieved in the operational and financial results, as well as the impact of macroeconomic developments on the outlook of USG People. In addition, the Supervisory Board spoke with the members of the Executive Board on a regular basis about representing the interests of the company s various stakeholders.

75 STRATEGY In the course of the year a great deal of time was spent discussing strengthening the positioning of USG People. This included discussions in various meetings on the divestments made in To prevent conflicts of interest the sale of USG Energy was discussed in the absence of the chairman. In addition to chairing the Supervisory Board of USG People, he is also a member of the Supervisory Board of Rabobank Nederland, a unit of which acquired USG Energy. Another meeting concerned the takeover of Adver-Online, an acquisition that supports the expansion of USG People s online services. Other meetings were about innovations in the infrastructure and service concepts, talent development in the organisation and succession planning for senior management positions. Project United, which was launched in 2013 with a view to improving the competitiveness of USG People, was discussed at length including the detailed plans to simplify the organisation, including changes in the senior management structure and cooperation and merging of the brands. Meetings were also held with the Executive Board about changes to the financing structure. Based on a proposal by the CFO, discussions were held about attracting a 60 million subordinated loan and reducing the syndicated bank facility from 700 million to 500 million, both of which were effected in The Supervisory Board believes these changes are important to achieve a good balance in the financing structure while maintaining sufficient room to facilitate the strategic plans without any problems. RESULTS In the course of the year the improvement in the operational and financial results was discussed. The Supervisory Board regularly discussed topics such as the development of revenue and gross margins and improvements in the cost structure with the members of the Executive Board. Expectations for the various markets in relation to economic developments in Europe were also discussed as well as the relative performance of USG People compared to its peers. Detailed talks were also held with the external auditor about the annual statements and the 2012 annual report. The 2014 budget was another topic discussed in detail, also in relation to general expectations with regard to economic developments. Various discussions were also held with the Executive Board about the current status and developments with regard to legal claims, including in Germany, and about the possible effects on USG People of changes in laws and regulations in different countries. STAKEHOLDERS Other topics discussed in meetings related to representing the interests of USG People s various stakeholders, including developing services and added value for clients, dividend and the development of the share price for shareholders, developing opportunities and succession planning for the company s own staff, making flex workers more sustainably employable and helping people in society with fewer opportunities find a job. COMPANY VISIT One of the regular meetings took place in a Unique flagship store in Amsterdam in September. Prior to the meeting the Supervisory Board members received a tour of the new Unique branch. At the meeting the Unique board members discussed the company s plans for the future, expanding on topics such as the changing role of physical branches in connection with online developments. They also gave an insight into current trends and developments and the manner in which Unique is responding. Visits to business units provide the Supervisory Board with the opportunity to get an even better picture of market developments, of the way that the USG People operating companies respond and the operational activities. RISK MANAGEMENT The topics of risk control and risk management within USG People were repeatedly discussed. The findings of internal audits and the external auditor were discussed in detail, as well as the resulting follow-up of the ensuing recommendations. PERFORMANCE AND ASSESSMENT In the year under review the Supervisory Board discussed and assessed its own performance and that of its individual members and the internal committees. The members of the Executive Board were not present at that time. The review took place in a plenary session as well as various one-on-one sessions with the chairman of the Supervisory Board and/or chairs of the internal committees. The topics discussed during the assessment included the contribution and involvement of the members of the Supervisory Board. One of the conclusions drawn from the assessments was that the members, both individually and together, are sufficiently critical of themselves and each other. The cooperation within the board was pleasant and the relationships were open, also with the board s advisor. The cooperation with the advisor was to everyone s satisfaction. The individual members complement each other, ensuring that everything can be discussed at wellbalanced meetings at which every topic can be discussed in sufficient depth. The chairman of the Supervisory Board spoke with each individual member of the Supervisory Board about their performance and concluded that they performed adequately, both individually and as an entity. In 2014 Marike van Lier Lels will resign as a member of the Supervisory Board and the board will part ways with Joost van Heyningen Nanninga as an advisor to the board. REPORT OF THE SUPERVISORY BOARD 073

76 REPORT OF THE AUDIT COMMITTEE In 2013 the audit committee consisted of Rinse de Jong (chairman) and Marike van Lier Lels. The audit committee met six times in person in the year under review, in accordance with the fixed schedule. The CEO, CFO, Corporate Director Corporate Audit & Risk Management and the external auditor also attended the meetings, as well as senior CFO staff members. One of the meetings was partly closed to assess the audit committee as a whole and the individual members. There was regular contact with the CFO between the meetings. The audit committee discussed the annual statements and interim financial reports, including the non-financial information, at the meetings prior to publication. The audit committee also discussed the internal control procedures, internal audits and findings in detail at quarterly meetings. The committee also discussed the findings of the external auditor at each meeting before the publication of results. A large number of other topics were discussed at the meetings in 2013, including: the 2012 financial statements, including the findings of the external auditor and the auditor s report; the 2013 interim results and reports and control findings, with specific attention for any valuation risks and provisions; the fiscal position, including questions regarding the realisation and associated valuations; the documents for the General Meeting of Shareholders; the proposal for the General Meeting of Shareholders with regard to the reappointment of the external auditor for 2013, 2014 and 2015 and the opportunity for the external auditor to speak at the General Meeting of Shareholders; the dividend proposal; the internal audit strategy, the progress made in the audits and risk management activities performed and the adoption of the annual planning for internal audit in 2014; the internal control procedures and reports; compliance with statutory and legal requirements; legal claims; the 2013 audit plan of the external auditor; the findings of the interim assessment for 2013 and the structure of the 2014 annual audit plan; the selection of a new auditing firm (with effect from 2016) as a result of relevant legislative amendments; the impact on results of the sale of USG Energy and the General Staffing activities in six countries; the impact of project United on the results and risks; the 2014 budget; the financing structure, liquidity and the development of balance sheet ratios; the ICT strategy and IT security policy; the procurement policy and organisation, with specific attention for sustainability; developments at the shared service centers. At one of the meetings the committee assessed its own performance and that of the individual members of the audit committee, and concluded that cooperation within the committee had been good and in particular with the CFO. In the opinion of the committee, its contacts with the Corporate Audit & Risk Management department, the external auditor and the Executive Board have been professional and constructive. The findings of the audit committee were reported to the complete Supervisory Board. REPORT OF THE REMUNERATION AND APPOINTMENTS COMMITTEE The remuneration and appointments committee consisted of Joost van Heyningen Nanninga (chairman), Alex Mulder and Cees Veerman until 8 May 2013, when Joost van Heyningen Nanninga s final term expired. Cees Veerman assumed the role of interim chairman on a temporary basis in the period that followed. The remuneration and appointments committee met three times in person in 2013; the CEO attended all the meetings. Following his term as a Supervisory Board member Joost van Heyningen Nanninga attended the meetings as an advisor. The committee was also in regular contact with the CEO outside of the meetings. The main topics discussed at the meetings were: labour conditions trends in the peer group and comparability with the peer group; the financial parameters for variable remuneration in the current year in connection with the divestments made in 2013; the remuneration of the Executive Board and senior management; changes in the Executive Board and corporate organisation; talent management and succession planning; the recruitment of members of the Supervisory Board. The progress made in the realisation of the Executive Board s financial and non-financial targets was discussed at each meeting. Non-financial targets were set for innovation, leadership and socially responsible business practices. These are the areas of attention that USG People believes are important for its continuity and which it wants to further develop. The remuneration of the Executive Board for 2013 was in accordance with the remuneration policy adopted by the General Meeting of Shareholders. A detailed account of the remuneration of the members of the Executive Board can be found in the remuneration report available via the USG People website.

77 In 2013 the committee also discussed the proposal for the remuneration policy for the Executive Board for The current policy approved by the General Meeting of Shareholders applies up to and including The remuneration policy for the Executive Board for will be submitted for approval to the General Meeting of Shareholders in Our discussions concerned the staffing consequences of project United. This included the changes to the Executive Board and the corporate organisation. In October the corporate organisation was simplified as part of project United. The Executive Board was reduced from five members to two and the divisional management and the corporate staff departments were adapted to the new organisation. These changes were discussed in detail in advance by the committee in the presence of the CEO. A closed meeting was held on the subject. Other discussions focused on the progress made in the recruitment of new members for the Supervisory Board. The term of Joost van Heyningen Nanninga expired in 2013 and Marike van Lier Lels term ends in Following a careful selection process the committee submitted the nominations of Johnny Thijs and Willemijn Maas for appointment to the board at the General Meeting of Shareholders of 8 May Both are very knowledgeable and a good fit in our company s profile. COMPOSITION OF EXECUTIVE BOARD In 2013 there was a change in the Executive Board. The size and complexity of the organisation were drastically reduced as a result of the divestments made in 2013 and the process of simplifying the organisation, which commenced in That meant that the governance structure could be simplified and decentralised. It also resulted in management being downsized and the Executive Board being reduced from five members to two. From 1 November 2013 the Executive Board consisted of Rob Zandbergen (CEO) and Leen Geirnaerdt (CFO). The change meant that the positions of Chief Operational Officer and Chief Corporate Officer disappeared. Hubert Vanhoe left the company on 1 October 2013 and Albert Jan Jongsma and Eric de Jong left on 1 December The Supervisory Board would like to thank these gentlemen for their commitment and loyalty in their many years of service for USG People, as well as their contribution to the development of the company. COMPOSITION OF SUPERVISORY BOARD There is sufficient knowledge of the temporary staffing market within the Supervisory Board. And there is also a financial specialist on the board. All members have the necessary experience in the field of general corporate management and in leading large, market-orientated organisations. This ensures that the board has sufficient knowledge and know-how to adequately perform its supervisory tasks. In 2013 the composition of the Supervisory Board did not fully comply with the diversity objectives outlined in the composition profile. The desired diversity in nationalities has not been achieved since the departure of Christian Dumolin and the percentage of female members was 25% at the end of That means that the Supervisory Board of USG People has not yet complied with the 30% requirement stipulated in the Dutch Act on Management and Supervision. USG People aspires to achieve a wide and diverse composition at every level of the company and will keep the requirements in mind as much as possible in future appointments. The proposed appointments of Johnny Thijs and Willemijn Maas will ensure that the Supervisory Board again fully meets the composition profile as regards the desired diversity of nationalities. The percentage of women in the Supervisory Board is 20%, which does not fully comply with the 30% requirement. The Supervisory Board took this into account when seeking the proposed new board members, as well as opting for complementarity in specific areas of expertise and considering the suitability of the respective candidate. The Supervisory Board aims for future appointments to ensure that the composition of the board meets this requirement. RESIGNATION ROTA At the end of 2013 the Supervisory Board consisted of four members appointed according to the following resignation rota: FIRST APPOINTED APPOINTMENT UNTIL Cees Veerman (chairman) Rinse de Jong Marike van Lier Lels Alex Mulder Rinse de Jong and Alex Mulder, who were both appointed until 2014, are available for reappointment and a proposal of this nature will be submitted to the General Meeting of Shareholders on 8 May REPORT OF THE SUPERVISORY BOARD 075

78 INDEPENDENCE AND CONFLICTS OF INTEREST Best practice provisions III.2.1. and III.6.1. up to and including III.6.4. of the Dutch Corporate Governance Code were complied with. Alex Mulder operated as CEO of USG People until 9 May He currently has a shareholding of more than 10% in the company and is therefore non-independent in the context of best practice provision III.2.2. Cees Veerman is a member of the Supervisory Board of Rabobank Nederland, which purchased USG Energy from USG People in Due to his position on the Supervisory Board of USG People, Cees Veerman did not participate in discussions about the sale of USG Energy in compliance with best practice provisions III.6.1 up to an including III.6.3. In 2013 no transactions transpired involving a conflict of interest on the part of any member of the Supervisory Board, nor were there any material transactions between USG People and any private individual or legal entity with a shareholding of at least 10% in the company. Any other transactions with the large shareholder are discussed in note 29 of the financial statements. DEVIATIONS FROM THE CORPORATE GOVERNANCE CODE USG People is in full compliance with the Corporate Governance Code. USG People deviates from the Code in certain areas of its policy, but these deviations have been approved by the company s shareholders. The following provides an explanation of the best practice provision from which USG People deviates. The remuneration policy for the Executive Board came into effect on 1 January The remuneration policy fully complies with the provisions of the Code, with the exception of severance pay of an Executive Board member s contract of employment in the event of a takeover of the company resulting in a change of control. In this case the termination payment shall amount to twice the fixed gross annual salary, including pension contribution, increased by one-twelfth of this fixed gross annual salary, including pension contribution, for each year of employment with USG People. As from 8 May 2013 the chairman of the Supervisory Board, Cees Veerman, has also assumed the role of interim chairman of the remuneration and appointments committee. His chairmanship of the remuneration and appointments committee resulted in a deviation from provision III.5.11 of the Code. Cees Veerman has assumed the role of chairman of the remuneration and appointments committee on a temporary basis. APPROVAL OF FINANCIAL STATEMENTS, DIVIDEND PROPOSAL AND DISCHARGE As stipulated in the Articles of Association, the Supervisory Board submits the financial statements as drawn up by the Executive Board to the General Meeting of Shareholders for adoption. The financial statements have been audited and received an unqualified auditor s report by PricewaterhouseCoopers Accountants N.V. To read the report from PricewaterhouseCoopers Accountants N.V. please refer to page 158 of the printed annual report or the PDF version available online. In accordance with the long-term dividend policy of USG People, the Executive Board proposes to distribute a dividend of 0.14 per share, either in cash or in shares, for the 2013 financial year. USG People aims to achieve continuity in the distribution of dividend in keeping with the cash-generating capacity and distribution possibility by means of a dividend. The long-term dividend policy is based on a distribution of one-third of net income before amortisation and impairment of acquisitionrelated intangible fixed assets and adjusted for the effects of unrealised value adjustments to interest rate derivatives. This proposal is expanded in more detail in the profit appropriation section. We, the Supervisory Board, support this proposal. We propose that the General Meeting of Shareholders adopt the financial statements, approve the dividend proposal, and grant discharge to the members of the Executive Board in respect of their management activities as well as to the Supervisory Board in respect of its supervision of these management activities. However, this termination payment shall not exceed three times the fixed annual salary including pension contribution. This is at variance with provision II.2.8. of the Code. USG People applies this policy regarding severance pay in the event of a change of control in recognition of the long-term employment of members of the Executive Board and moreover, given the shareholder structure of USG People, to protect their position as directors within the company.

79 IN CONCLUSION For USG People 2013 was a year of bringing about big changes. Detailed discussions on the matter were constantly held between the Supervisory Board and the members of the Executive Board. The changes achieved touched on many aspects of our business operations, so that the complementarity of the individual members of the Supervisory Board made a valuable contribution to well-balanced discussions and decision-making on the various topics that were addressed. The Supervisory Board wishes to thank all the staff and management of USG People for their contribution this past year. The change that USG People underwent in 2013 is a testament to the exceptional adaptability of the staff in the organisation. This bodes well for the success of USG People in the future. Almere, 26 February 2014 The Supervisory Board Cees Veerman, Chairman Rinse de Jong Marike van Lier Lels Alex Mulder REPORT OF THE SUPERVISORY BOARD 077

80 PRINCIPLE FEATURES OF THE REMUNERATION REPORT The Supervisory Board retains the right to deviate from the aforementioned levels of remuneration in certain cases. The remuneration policy that applies to the USG People Executive Board is set by the General Meeting of Shareholders for a period of several years. The shareholders approved the remuneration policy for the period from 2011 to 2014 during the General Meeting of Shareholders on 26 May The Supervisory Board determines the remuneration of the individual members of the Executive Board based on the policy set by the General Meeting of Shareholders. The remuneration policy for the period from 2011 to 2014 is aimed at attracting and retaining qualified directors for the Executive Board who have the drive and sustained commitment to add value to USG People. MARKET-COMPATIBLE POLICY The policy is aimed at being as much as possible in line with market-compatible practice, taking into account the remuneration practice within the performance peer group. This group consists of USG People s direct competitors. 2) Variable short-term cash remuneration The strategic growth of USG People is measured using two financial performance indicators, namely Earnings Before Interest, Tax and Amortisation (EBITA) as a percentage of revenue and EBITA as a percentage of the gross margin. The variable short-term cash remuneration is also linked to a third financial performance indicator: average Days Sales Outstanding (DSO). Part of the variable short-term cash remuneration now depends on the results of qualitative objectives. These qualitative objectives relate to leadership and culture, socially responsible business practices and innovation. The results targeted within these areas are set annually in light of the strategic development of USG People. 3) Variable long-term share remuneration The Supervisory Board outlined a share plan for the period from 2011 to 2014 that was approved by the General Meeting of Shareholders on 26 May Another reference point is a labour market reference group consisting of a balanced selection of shares listed on the Amsterdam Midkap Index (AMX) and the Amsterdam Exchange Index (AEX). This labour market reference group provides a framework for determining the amount, structure and composition of the remuneration of the members of the Executive Board. STRUCTURE OF THE EXECUTIVE BOARD REMUNERATION The remuneration of the Executive Board consists of five components: a fixed gross annual salary, a variable short-term cash remuneration, a variable long-term share remuneration, a pension contribution, and a car and other emoluments. 1) Fixed gross annual salary The Supervisory Board applies a market compatible remuneration level within the median and third quartile range based on the aforementioned labour market reference group for the fixed annual gross salary for the members of the Executive Board. The fixed gross annual salaries for the period from 2011 to 2014 have been set as follows: POSITION FIXED GROSS ANNUAL SALARY CEO 625,000 CFO 400,000 The policy for the variable long-term share remuneration is defined as follows: a. The variable long-term share remuneration (performance shares) is conditionally granted each year based on the results of pre-set financial parameters. These are EBITA as a percentage of revenue and EBITA as a percentage of the gross margin. Furthermore part of the variable long-term share remuneration is conditionally granted each year based on qualitative targets, as well as leadership and culture, socially responsible business practice and innovation; b. The financial performance targets for the year in question are set by the Supervisory Board prior to the start of each performance year. After the close of the year in question it is determined to what extent the applicable financial performance targets and qualitative targets have been met; c. The variable long-term share remuneration target is 70% linked to the financial performance targets. These are EBITA as a percentage of revenue and EBITA as a percentage of the gross margin. The remaining 30% is linked to qualitative targets; d. The spread of the minimum (D) target (T) maximum (M) number of conditionally granted shares linked to the financial targets is 28% (D) 70% (T) 140% (M) of the total target number of shares. A total of 30% of the total target number of shares is made available if the qualitative performance targets are met. If the results of the financial parameters fail to meet the defined threshold targets and no qualitative targets

81 are met whatsoever, the number of conditionally allocated shares is nil. If the results meet the defined threshold targets (both financial and qualitative targets), the number of shares unconditionally allocated is 140% (relating to the financial targets) + 30% (relating to the qualitative targets) = 170% of the target number of shares; g. Shares are only allocated unconditionally if the director is still employed by the company at the time the shares are formally unconditionally allocated; h. USG People is responsible for the payment of income tax on the value of the shares at the moment of unconditional allocation; e. The gross value of the number of conditionally granted shares for each individual performance year will never exceed one year s fixed gross annual salary excluding pension contribution. The gross value (including income tax and social security premiums) is calculated based on the average closing share price as listed on NYSE Euronext Amsterdam for the performance year; f. The performance period of the Unique Share Plan is four years. After this four-year period the total of all shares conditionally granted each year will be granted unconditionally; i. After the shares are unconditionally allocated, a holding period of one year will apply, during which time the shares may not be transferred; The Supervisory Board is authorised to reclaim the variable remuneration allocated to a member of the Executive Board on the basis of inaccurate financial and other information (clawback). j. The Supervisory Board is authorised to adjust the value of a conditional remuneration component allocated in a previous financial year upward or downward if, in its opinion, it would lead to unfair results due to exceptional circumstances during the period in which the pre-set performance criteria were or should have been achieved. Under the Unique Share Plan the number of shares to be allocated conditionally in the four-year performance period is as follows: MINIMUM (IF THE MINIMUM PERFORMANCE IS NOT ACHIEVED) TARGET (100%) NUMBER OF SHARES IN PERFORMANCE PERIOD (4 YEARS IN TOTAL) MAXIMUM (170%) NUMBER OF SHARES IN PERFORMANCE PERIOD (4 YEARS IN TOTAL) CEO 0 90, ,000 CFO 1) 0 60, ,000 1) The target and maximum number of shares for the CFO for the entire performance period equals 57,500 and 98,000, respectively, with effect from The target and maximum number of shares of the CFO was 12,500 and 21,250 per year, respectively, up to and including The Supervisory Board reserves the right to deviate from the above target number of shares per year in certain cases. REPORT OF THE SUPERVISORY BOARD 079

82 4) Pension contribution The members of the Executive Board receive a gross pension contribution of 23% of their fixed gross annual salary. 5) Car and other emoluments The members of the Executive Board have a lease car at their disposal suitable to their position. The members of the Executive Board do not receive a fixed allowance for representation expenses. Any business-related representation expenses are claimed and reimbursed. APPOINTMENT POLICY The members of the Executive Board are appointed by the Supervisory Board. All members of the Executive Board are appointed for a period of four years from the moment of their appointment. DATE OF APPOINTMENT APPOINTED UNTIL CEO Rob Zandbergen 2) See note 31 December 2014 CFO Leen Geirnaerdt 20 December December ) Rob Zandbergen was a director of Solvus NV from and subsequently a member of the Executive Board of USG People. In connection with the alignment of the terms of employment of all members of the Executive Board, his appointment for an indefinite period of time was changed into an appointment for a period of four years from NOTICE AND DISMISSAL POLICY A notice period of three months has been agreed with the members of the Executive Board for the members of the Executive Board and six months for the company. The payment upon termination of the contract of employment for reasons not attributable to the person will not exceed the amount of one year s fixed gross annual salary (subject to the agreed term of notice) including pension contribution. If the maximum of one year s fixed gross annual salary for a member of the Executive Board dismissed during the first term of their employment is manifestly unreasonable, the person becomes eligible for a termination payment of not more than twice their fixed gross annual salary, including pension contribution. If the company terminates the appointment and the employment contract for reasons attributable to the person, the company will not be obliged to make any payment whatsoever. In the event the contract of employment is terminated as a result of an acquisition of the company, resulting in a change of control, the payment upon termination will amount to two times the fixed gross annual salary, including pension contribution, plus one-twelfth of this fixed gross annual salary, including pension contribution, for every year of employment with USG People. This payment upon termination will, however, not exceed three times the fixed gross annual salary, including pension contribution. USG People applies a termination payment policy in the event of a change of control of the company to reward multi-year employment of members of the Executive Board as well as to protect the position of members of the Executive Board of the company in view of USG People s shareholder structure.

83 REMUNERATION OF THE EXECUTIVE BOARD In 2013 the remuneration of the individual members of the Executive Board was as follows: FIXED GROSS ANNUAL SALARY VARIABLE SHORT-TERM CASH REMUNERATION TOTAL CASH REMUNERATION PENSION CONTRIBUTION VALUE OF VARIABLE SHARE- BASED REMUNERATION 3) TOTAL CAR AND OTHER EMOLU- MENTS Rob Zandbergen , , , , ,000 1,092,956 22, , ,572 1,153, , ,110 1,686,432 22,000 Leen Geirnaerdt ,000 87, ,492 92, , ,492 12, , , ,286 92, ,903 1,053,189 17,600 Eric de Jong ,000 86, ,212 92, , ,212 20, , , ,763 84, , ,283 17,700 Hubert Vanhoe ,000 75, ,435 80,500 45, ,935 17, ,000 31, ,875 80, , ,624 13,300 Albert Jan Jongsma ,000 71, ,607 74,750 86, ,357 16, , , ,870 68, , ,930 14,000 3) Includes shares granted under the Unique Share Plan and the Unique Share Plan , in accordance with IFRS 2. The income tax and social security premiums linked to the distribution of shares are paid by USG People. The following tables provide a detailed account of the number of shares conditionally allocated to the members of the Executive Board in 2013: PERFORMANCE PERIOD PERFORMANCE YEAR 2013 ROB ZANDBERGEN CEO LEEN GEIRNAERDT CFO ERIC DE JONG COO 6) HUBERT VANHOE COO 6) ALBERT JAN JONGSMA CCO 6) SHARES CONDITIONALLY GRANTED 5) Number of shares (minimum) 4) Number of shares (target) 22,500 15,000 15,000 15,000 10,000 Number of shares (maximum) 38,250 25,500 25,500 25,500 17,000 Number of shares granted (result) 18,675 12,450 11,413 9,338 7,608 Date of allocation Average closing share price in performance year Number of shares allocated (previous performance years) 19,238 12,165 12,795 5,780 8,650 Date of unconditional allocation AGM 2015 AGM 2015 AGM 2015 AGM 2015 AGM 2015 Restricted until AGM 2016 AGM 2016 AGM 2016 AGM 2016 AGM ) Number of shares if minimum performance is not achieved. 5) The conditional allocation of shares is accounted for in the remuneration report at the conclusion of each financial year. Shares are granted unconditionally only if the member of the Executive Board is still employed by the company at the time the shares are unconditionally granted. 6) The shares conditionally allocated to Eric de Jong, Hubert Vanhoe and Albert Jan Jongsma for 2013 relate to their period of active contribution in Because these shares are only awarded unconditionally if the board member is employed by the company at the moment of unconditional allocation, there is no question of unconditional allocation. REPORT OF THE SUPERVISORY BOARD 081

84 Summary and account of the methods used to determine whether the performance criteria for the variable short-term and longterm remuneration were met: LOANS No loans, advances or related guarantees have been granted to members of the Executive Board. Before the start of the financial year the Supervisory Board sets annual targets with regard to the applicable performance criteria. The following performance criteria applied for 2013: EBITA as a percentage of revenue, EBITA as a percentage of the gross margin and Days Sales Outstanding (DSO). In this context minimum results are defined to set a threshold below which no variable remuneration (short-term or long-term) is awarded. A ceiling is also set for targeted results; After extensive internal control at the conclusion of each financial year the financial results are submitted to the external auditor for inspection. In anticipation of the results being approved a provisional estimate is made with regard to the allocation of the variable short-term and long-term remuneration; TERMINATION ARRANGEMENT In 2013 USG People simplified the company s board structure. As a result the employment contracts of Eric de Jong, Hubert Vanhoe and Albert Jan Jongsma with USG People were terminated in In connection with these terminations the following termination payments were agreed: DATE OF TERMINATION TERMINATION PAYMENT Eric de Jong ,230,000 Hubert Vanhoe ,000 Albert Jan Jongsma ,375 Total 2,844,375 The Supervisory Board decided in the course of the 2013 performance year to adjust the financial performance criteria for the variable short-term and long-term remuneration. The adjustment is a result of the sale of part of the activities of USG People in the course of the year, mainly USG Energy in the Netherlands and the General Staffing activities in Spain, Italy, Switzerland, Austria, Poland and Luxembourg. Accordingly the Executive Board adjusted the financial performance criteria for senior management for the variable sort-term and longterm remuneration where necessary; The decision on any allocation is taken and recorded by the Supervisory Board following approval of the annual results. OPTION RIGHTS Not taking into account the existing share plan, no share options are held by the members of the Executive Board. The termination payment for Hubert Vanhoe amounts to one time the fixed gross annual salary including pension contribution and financial compensation for three of the six-month notice period. Hubert Vanhoe was relieved of his duties on 1 October The termination payment for Eric de Jong and Albert Jan Jongsma amounts to twice the fixed gross annual salary including pension contribution and financial compensation for the six-month notice period. The agreed termination payments are in compliance with the remuneration policy approved by shareholders for the period and the Supervisory Board is of the opinion that the payments are fair. The payment for Eric de Jong and Albert Jan Jongsma also takes into consideration their long period of employment, 27 and 18 years respectively, with USG People.

85 REMUNERATION OF THE SUPERVISORY BOARD The fixed remuneration of the chairman and members of the Supervisory Board is set at 57,500 and 42,500 per year, respectively. All members of the internal committees receive an amount of 7,500 per year for their involvement in these committees. All members of the Supervisory Board also receive an annual expense allowance of 2,000. In 2013 the individual remuneration of the members of the Supervisory Board was as follows: PERIODICAL REMUNERATION (INCLUDING EXPENSE ALLOWANCE) Cees Veerman 67,000 67,000 Joost van Heyningen Nanninga 7) 18,440 52,000 Rinse de Jong 52,000 52,000 Marike van Lier Lels 52,000 52,000 Alex Mulder 52,000 52,000 7) The term of Joost van Heyningen Nanninga expired on Mr Van Heyningen Nanninga was not reappointed having reached the maximum term of 12 years. No share options are held by members of the Supervisory Board. No loans, advances or related guarantees have been granted to members of the Supervisory Board. REPORT OF THE SUPERVISORY BOARD 083

86 084 INDEX FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS consolidated income statement consolidated statement of comprehensive income consolidated balance sheet as at 31 december consolidated statement of change in shareholders' equity consolidated statement of cash flows notes to the consolidated financial statements 1. general information 2. summary of significant accounting policies 3. financial risk management 4. estimates and judgements by management 5. acquisitions and divestments of subsidiaries 6. operating segments 7. cost of sales 8. selling, general and administrative expenses 9. other income and expenses 10. finance costs 11. finance income 12. income tax expense 13. property, plant and equipment 14. goodwill 15. other intangible assets 16. financial fixed assets 17. deferred income tax assets and liabilities 18. trade and other receivables 19. cash and cash equivalents and bank overdrafts 20. capital and reserves attributable to equity holders 21. earnings per share attributable to equity holders 22. borrowings 23. pension-related liabilities 24. provisions 25. bank overdrafts and borrowings 26. trade and other payables 27. derivative financial instruments 28. share-based remuneration 29. related parties 30. commitments 31. contingent assets and liabilities 32. events after balance sheet date 33. principal subsidiaries and associates of USG People N.V COMPANY FINANCIAL STATEMENTS company income statement company balance sheet at 31 december (before profit appropriation) notes to the company income statement and balance sheet 1. accounting principles for preparing the company financial statements 2. intangible assets 3. property, plant and equipment 4. subsidiaries 5. other financial fixed assets 6. deferred income tax assets 7. other current receivables 8. equity 9. provisions 10. non-current liabilities 11. current liabilities 12. employees 13. liability 14. audit fees 15. remuneration of the executive board and supervisory board OTHER DATA events after the balance sheet date provisions in the articles of association regarding profit appropriation profit appropriation independent auditor s report

87 CONSOLIDATED INCOME STATEMENT 2012 note: amounts in thousands of euros 2013 RESTATED* 6 Revenue 2,270,031 2,441,954 7 Cost of sales -1,783,088-1,906,703 Gross profit 486, ,251 8 Selling expenses -355, ,201 8 Amortisation and impairment of acquisition-related intangible assets -14, ,684 Total selling expenses -369, ,885 8 General and administrative expenses -104,954-95,209 9 Other income and expenses Total operating expenses -474, ,077 5 Net income from divestments 28,688 5,620 Operating income 41, , Finance costs -16,491-22, Finance income 6,909 10,619 Income before tax 31, , Income tax expense -19,513-18,876 Net income from continuing operations 12, ,933 5 Net income from discontinued operations -38,290-50,163 NET INCOME -26, ,096 ATTRIBUTABLE TO: Equity holders of the company -26, ,179 Non-controlling interests , ,096 EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY (in euros, per share of 0.50 nominal) 21 Basic * The divestment of the General Staffing activities and changes to IAS 19 Employee benefits resulted in a restatement of the 2012 figures. CONSOLIDATED FINANCIAL STATEMENTS 085

88 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 2012 note: amounts in thousands of euros 2013 RESTATED* Net income -26, ,096 Other comprehensive income after tax: Items that will not be reclassified to the income statement: 23 Remeasurement of pension liabilities 203-1, ,182 Items that may be reclassified to the income statement : 27 Cash flow hedge Currency translation differences Other comprehensive income after tax TOTAL COMPREHENSIVE INCOME -25, ,908 ATTRIBUTABLE TO: Equity holders of the company -25, ,991 Non-controlling interests , ,908 * The divestment of the General Staffing activities and changes to IAS 19 Employee benefits resulted in a restatement of the 2012 figures.

89 CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 1 JANUARY note: amounts in thousands of euros 2013 RESTATED * RESTATED * NON-CURRENT ASSETS 13 Property, plant and equipment 16,329 26,869 33, Goodwill 678, , , Other intangible assets 59,974 69,983 81, Financial fixed assets 26,954 14,742 12, Deferred income tax assets 62,507 72,449 75, , ,993 1,123,747 CURRENT ASSETS 18 Trade and other receivables 279, , ,782 Current income tax receivables 1,793 6,628 5, Cash and cash equivalents 63,965 35,355 55, , , ,212 TOTAL ASSETS 1,189,596 1,344,726 1,650, EQUITY Capital and reserves attributable to equity holders of the company Share capital 406, , ,390 Legal reserves 1,413 1,137 14,877 Retained earnings 50,532 81, , , , ,643 Non-controlling interests 1, Total equity 459, , ,185 NON-CURRENT LIABILITIES 22 Borrowings 209, , , Derivative financial instruments Pension-related liabilities 6,201 7,481 5, Provisions 36,298 14,574 12, Deferred income tax liabilities 7,747 11,492 25, , , ,117 CURRENT LIABILITIES 25 Bank overdrafts and borrowings 32,532 62, , Trade and other payables 396, , ,632 Current income tax liabilities 9,900 15,989 31, Derivative financial instruments - 6,228 13, Provisions 31,961 38,880 56, , , ,657 Total liabilities 730, , ,774 TOTAL EQUITY AND LIABILITIES 1,189,596 1,344,726 1,650,959 * The changes to IAS 19 Employee benefits resulted in a restatement of the 2012 figures. CONSOLIDATED FINANCIAL STATEMENTS 087

90 CONSOLIDATED STATEMENT OF CHANGE IN SHAREHOLDERS EQUITY note: amounts in thousands of euros ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY SHARE CAPITAL LEGAL RESERVES RETAINED EARNINGS SUB-TOTAL NON- CONTROLLING INTERESTS TOTAL EQUITY Balance as at 1 January ,390 14, , , ,795 2 Restatement under IAS ,610-8, ,610 Balance as at 1 January 2012 restated* 406,390 14, , , ,185 Net income , , , Remeasurement of pension liability ,182-1, ,182 Currency translation differences Total comprehensive income , , , Change share plan Change resulting from repayment of convertible bond - -14,716 14, Dividend for ,334-6, ,334 Dividend paid to holders of non-controlling interests ,110 8,382-5, ,802 BALANCE AS AT 31 DECEMBER 2012 RESTATED* 406,390 1,137 81, , ,475 Balance as at 1 January ,390 1,137 81, , ,475 Net income ,058-26, , Remeasurement of pension liability Cash flow hedge Currency translation differences Currency translation differences resulting from divestment of subsidiaries Total comprehensive income ,889-25, , Change share plan Acquisition of subsidiary Dividend for ,976-4, ,976 Dividend paid to holders of non-controlling interests ,976-5, ,445 BALANCE AS AT 31 DECEMBER ,390 1,413 50, ,335 1, ,584 * The changes to IAS 19 Employee benefits resulted in a restatement of the 2012 figures.

91 CONSOLIDATED STATEMENT OF CASH FLOWS 2012 note: amounts in thousands of euros 2013 RESTATED * CASH FLOW FROM OPERATING ACTIVITIES Income before tax 31, ,057 Adjustments: 13, 15 Depreciation, amortisation and impairment of tangible and intangible assets 33, ,451 13, 15 Result on sale of tangible and intangible assets 1, Net income from divestments -28,688-5, Other non-cash flow receivables -13, Finance costs 16,491 22, Finance income -6,909-10, Share plan expenses processed via equity Currency translation differences , 24 Change in pension-related liabilities and provisions 10,830-13,058 Changes in working capital: - trade and other receivables 14,864 66,020 - trade and other payables -19,407-70,934 Operating cash flow from continuing activities 40,283 65,357 Income tax paid -16,915-37,821 Net cash flow from continuing operating activities 23,368 27,536 Net cash flow from discontinued operating activities 2,818 1,501 Net cash flow from operating activities 26,186 29,037 CASH FLOW FROM INVESTING ACTIVITIES 5 Acquisitions of subsidiaries -4,209-14, Investments in property, plant and equipment -3,570-5, Investments in intangible assets -13,566-12,000 13, 15 Disposals of tangible and intangible assets Divestment of subsidiary 81,443-3,528 Payments on borrowings and guarantee deposits -1,108-1,582 Net cash flow from continuing investing activities 59,440-37,217 Net cash flow from discontinued investing activities ,727 Net cash flow from investing activities 58,698-38,944 CASH FLOW FROM FINANCING ACTIVITIES Payments on derivative financial instruments -6,211-9, Proceeds from borrowings , Repayments of borrowings -36, , Refinancing transaction expenses paid -2,037 - Interest paid -7,172-9,119 Interest received 692 1,335 Dividend paid to holders of non-controlling interests Dividend paid -4,976-6,334 Net cash flow from continuing financing activities -56,311-7,630 Net cash flow from discontinued financing activities -1, Net cash flow from financing activities -57,339-8,234 INCREASE / DECREASE CASH AND CASH EQUIVALENTS 27,545-18,141 CHANGE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents and bank overdrafts as at 1 January 21,402 39,543 Increase / decrease in cash and cash equivalents 27,545-18, CASH AND CASH EQUIVALENTS AND BANK OVERDRAFTS AS AT 31 DECEMBER 48,947 21,402 * The divestment of the General Staffing activities and changes to IAS 19 'Employee benefits' resulted in a restatement of the 2012 figures. CONSOLIDATED FINANCIAL STATEMENTS 089

92 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. GENERAL INFORMATION The corporate structure of USG People N.V. is a legal entity with limited liability (public limited company). USG People N.V. has its registered office in Almere, the Netherlands. The shares of the company are listed on the NYSE Euronext Amsterdam stock exchange. The address of the company is: P.J. Oudweg CK Almere The Netherlands USG People provides all types of flexible employment services and a range of other services in the area of human resources, education, training and customer care. The group operates in eight countries. The consolidated IFRS financial statements of the company for the year ended 31 December 2013 comprise the company and its subsidiaries (together referred to as the group ). An overview of the main subsidiaries can be found in note 33. The financial statements were prepared by the Executive Board. The financial statements were signed by the Supervisory Board on 26 February 2014 and will be submitted to the General Meeting of Shareholders on 8 May 2014 for adoption. In the preparation of the financial statements of USG People N.V. the exemption contained in article 402 Book 2 of the Dutch Civil Code was applied with respect to the company income statement. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1. Basis of preparation of the financial statements The consolidated financial statements for 2013 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted within the European Union. The financial statements are presented in euros ( ). Amounts are shown in thousands of euros unless otherwise stated. Unless otherwise indicated the consolidated financial statements are based on historical cost. Financial assets and financial liabilities (including derivative instruments) are initially recognised at fair value. Subsequent valuations of receivables and monetary financial liabilities are based on amortised cost. Subsequent valuations of derivatives are based on fair value. estimates and assumptions serve as the basis for assessing the value of recognised assets and liabilities whose amounts cannot currently be determined from other sources. Actual results may differ from the estimates. Information on assessments and evaluations that may have a material impact on the financial statements are stated in note 4. The accounting policies have been applied consistently by the group companies during the periods presented in these consolidated financial statements. Comparative figures The comparative figures have been restated for two reasons. Firstly due to the divestment of the General Staffing activities in Spain, Italy, Austria, Switzerland, Poland and Luxembourg. The restatement has been made in accordance with IFRS 5, meaning that the comparative figures for these activities are omitted from the income statement. See note 5 for further information. The other reason for the restatement of the comparative figures in the balance sheet and income statement is the change in accounting policy as a result of the amended standard IAS 19 Employee benefits. The impact of the change in accounting policy is explained in the following section. Standards, amendments and interpretations effective from the 2013 financial year The consolidated financial statements are amended as a result of the amended standard IAS 19 Employee benefits. The amended standard eliminates the option to defer the recognition of actuarial gains and losses over future periods (the so-called corridor approach). Actuarial gains and losses will have to be directly recognised in other comprehensive income as soon as they occur. In addition, unrecognised pension expenses relating to the past period of employment must be recognised directly in the income statement. The interest costs and the expected return on investments are replaced by a net interest amount calculated on the net liability or net asset using a discount factor. Administration costs are recognised in the income statement, administrative expenses in comprehensive income. The amended standard has also resulted in the fact that liabilities based on the own risk bearer status of sick employees that were previously classified as short-term employee benefits are now classified as long-term employee benefits. The abovementioned changes are recognised as changes in accounting policies. The impact of the changes on the balance sheet and the income statement of the group is as follows: Preparing the financial statements in accordance with IFRS means that management is required to make assessments and estimates when applying the principles of valuation. The estimates made and the related assumptions are based on historical experience and various other factors which are considered to be reasonable under the given circumstances. The

93 1 JANUARY 2012 amounts in thousands of euros 1 JANUARY 2012 IMPACT IAS 19 RESTATED ASSETS Other non-current assets 5,503-5,503 - Net deferred taxes 47,588 2,925 50,513 LIABILITIES Pension-related liabilities 18 5,971 5,989 Provisions 68, ,035 Equity 695,795-8, ,185 Operating income , ,652 Earnings per share Operating income for 2013 would be 152 lower under the former IAS 19. Furthermore as a result of a change in IAS 1 Presentation of financial statements a distinction is made in the consolidated statement of comprehensive income between items that will not be reclassified to the income statement and items that may be reclassified to the income statement. With the exception of the aforementioned changes, amendments in standards that came into effect from 2013 are not of material importance to the group and have no impact on the amount of group income and equity, nor on the notes. This also applies to IFRS 13 Fair Value Measurement in view of the limited application of fair value as a basis of preparation in the financial statements of the group This new standard has no impact on the size or composition of group equity and income. The group will apply this standard as from the financial year commencing on 1 January IFRS 12 Disclosure of Interests in Other Entities. This standard defines the disclosure requirements for all forms of interests in other entities, including associates and off balance sheet vehicles. Application is mandatory for financial years commencing on or after 1 January This new standard has no impact on the size or composition of group equity and income. The group will apply this standard as from the financial year commencing on 1 January Other amendments of standards and interpretations which are not yet in effect are not expected to impact the amount of income and equity or the notes. Standards, amendments and interpretations not effective in the 2013 financial year but applicable to the group IFRS 9 Financial Instruments. The standard determines the conditions for the classification and valuation of financial assets initially set out in IAS 39 Financial Instruments: Recognition and Measurement. Application is mandatory for financial years commencing on or after 1 January The group is currently reviewing the impact of this amendment. This amendment is not expected to have a material impact on the amount or composition of group equity and income. The group will apply this standard as from the financial year commencing on 1 January IFRS 10 Consolidated Financial Statements. This standard identifies the concept of control as the determining factor in whether an entity should be included in the financial statements of the parent company and provides additional guidance where the determination of control is difficult to assess. Application is mandatory for financial years commencing on or after 1 January 2.2. Consolidation of subsidiaries Subsidiaries are all entities over which the group has direct or indirect control of the financial and operating policy, in general either through ownership of a majority of the voting rights or through any other means of controlling their financial and operating activities. Subsidiaries are fully consolidated from the date on which the group gains decision-making control and are deconsolidated from the date on which that control ceases. The acquisition method applies to the initial recognition of subsidiaries by the group. The consideration transferred for the acquired company is based on the fair value of the assets ceded, the equity instruments issued and liabilities incurred or assumed at the transaction date, including contingent considerations. Contingent considerations (earn-outs) are owed if pre-determined conditions laid down in a contract have been met. The likeliness of a contingent consideration being paid is considered in the valuation on the transaction date and is CONSOLIDATED FINANCIAL STATEMENTS 091

94 reconsidered at each balance sheet date. Changes in the value of contingent considerations are recognised in the income statement as well as the transaction-related costs. Changes in the value of contingent considerations for acquisitions up to and including 2009 are recognised in goodwill. The stake of the acquired company which was already in the group s ownership prior to the time of acquisition is recognised at fair value. Changes in the value are recognised as finance costs or finance income in the income statement. Identifiable assets, contingent liabilities and liabilities assumed in a business combination are initially stated in the financial statements at their fair value on the date of acquisition. The group recognises any non-controlling interest in the acquired entity at fair value or at the proportional stake of the noncontrolling interest in the acquired net assets. The positive difference between the consideration transferred for the acquired entity and the fair value of assets and liabilities that are identifiable is recognised as goodwill. In the event of the consideration transferred for the acquired entity being lower than the fair value, the difference is recognised in the income statement. Transactions with minority shareholders, whereby decisionmaking control does not cease to exist, are recognised as transactions with group shareholders. In the event of purchases of interests held by minority shareholders, the difference between the amount paid and the acquired share of the net asset value (recognised as minority interests under shareholders equity) is added or charged to shareholders equity. Intercompany transactions, balance sheet items and unrealised results on transactions between group companies are eliminated. Where necessary, the accounting policies of subsidiaries are brought into line with those applied by the group Operating segments Operating segments are reported in accordance with internally reported information to the chief operating decision-maker. The Executive Board is regarded as the chief operating decisionmaker responsible for the allocation of funds to and the assessment of the operating segments Foreign currency General Items in the financial statements of the various group companies are measured in the currency of the primary economic environment in which each entity operates (the functional currency). The consolidated financial statements are presented in euros ( ), this being the group s presentation currency Foreign currency transactions and translation Transactions in foreign currency are translated into the functional currency at the exchange rate applicable at the date of the transactions. Currency translation differences resulting from the settlement of these transactions and the translation of the monetary assets and liabilities denominated in foreign currency at the balance sheet date are recognised as finance costs or finance income in the income statement Group companies The results and financial positions of group companies with a functional currency other than the euro are calculated as follows: assets and liabilities, including goodwill and fair-value adjustments arising on consolidation, are translated into euros at the exchange rates applicable at the balance sheet date; income and expenses are translated into euros at rates approximate to the exchange rates applicable at the date of the transaction; currency translation differences are recognised in comprehensive income. In the event of the complete or partial divestment of foreign group companies with a currency other than the euro, translation differences are recognised in the income statement as net income from divestments Property, plant and equipment Property, plant and equipment are carried at historical cost less depreciation, determined on the basis of estimated useful life and impairment losses. Historical cost consists of all expenses directly attributable to the acquisition of the asset. The group is structured into segments and further analysed on a country basis. The Executive Board bases its decisions on this. Disclosure on the operating segments is in keeping with this grouping, with a number of countries in several segments being combined due to their size.

95 Depreciation expenses are charged to the income statement using the straight-line method based on the estimated useful life of an asset according to the component method. There is no depreciation on land. The estimated useful life of property, plant and equipment varies according to category, as shown below: CATEGORY YEARS Trademarks 10 Customer relationships 9 Candidate databases 6 Software 5-10 CATEGORY YEARS Buildings 40 Furnishings and conversions 5-10 Computer and peripherals 3-5 Other fixed assets Software Software licences are capitalised on the basis of the costs incurred to acquire the software and make it ready for use. Software developed in-house is capitalised insofar as its cost price arises from the development and test phase of a project and insofar as it can be demonstrated that: The residual value, method of depreciation and depreciation period are reviewed annually at the balance sheet date and adjusted if necessary by a change in the estimate for the financial year and subsequent periods Goodwill Goodwill arises from the acquisition of subsidiaries and is calculated as the difference between the consideration transferred and the fair value at acquisition date of the identifiable assets, liabilities and contingent liabilities acquired. For the purpose of impairment testing, goodwill is allocated to those groups of cashgenerating units expected to benefit from the acquisition. Goodwill is not amortised. Please refer to 2.8 Impairment of non-financial assets for further information. If an entity is divested, the carrying amount of its goodwill is recognised in income. If the divestment concerns part of a group of cash-generating units, the amount of goodwill written off and recognised in income is determined on the basis of the relative value of the part divested compared to the value of the entire group of cash-generating units Other intangible assets Intangible assets obtained through acquisition Intangible assets obtained through acquisition consist of trademarks, customer relationships, software and candidate databases. These are initially recognised at fair value and subsequently at cost. Intangible assets have a finite useful life and are carried at cost less amortisation and any impairment. Please refer to 2.8 Impairment of non-financial assets for further information. Amortisation is charged to the income statement using the straight-line method based on the following estimated maximum useful life: the project is technically feasible and suitable for use; it is the intention to complete the project and use the software; the software will generate proven economic benefits in the future; technical, financial and other means are in place to complete and use the software, and it is possible to determine the expenses attributable to the software developed in a reliable manner. Expenses directly attributable to the software developed in-house consist of personnel expenses and a appropriate allocation of general expenses. Finance costs are also allocated to software developed in-house insofar as the development phase is longer than one year, using an interest rate equal to the average interest rate paid by the group. Software has a finite useful life and is subsequently carried at cost less amortisation and impairment. Please refer to 2.8 Impairment of non-financial assets for further information. Amortisation is charged to the income statement using the straight-line method based on the estimated useful life Impairment of non-financial assets Assets that have an indefinite useful life, such as goodwill, are not subject to amortisation but to annual impairment testing or more often if events or circumstances may necessitate an impairment. Assets subject to amortisation are assessed at such time as events or changes may necessitate an impairment. An impairment loss is the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset s value in use and its fair value less selling expenses. The value in use is determined by calculating the present value of estimated future cash flows using a pre-tax discount factor which reflects both the current market assessment of the time value of money and the specific risk connected with the asset. CONSOLIDATED FINANCIAL STATEMENTS 093

96 For the purpose of impairment testing on goodwill, assets of cash-generating units are grouped at the lowest level within the group at which goodwill is monitored for internal purposes. Non-financial assets other than goodwill that have been subject to impairment are assessed at each reporting date for possible reversal of the impairment charge. receivables. Collection of any amounts previously written off goes towards reducing the amount of selling expenses in the income statement. Services supplied but not yet billed to the client are also recognised as trade receivables Financial fixed assets Loans and receivables Loans and receivables are financial assets (not being derivative financial instruments) that are not quoted in an active market and have fixed or determinable repayment terms. Loans and receivables are recognised under current assets, except if the maturity date is more than 12 months after the balance sheet date, in which case they are classified as non-current assets. Current loans and receivables consist of trade and other receivables (see 2.10) and cash and cash equivalents (see 2.12) Guarantee deposits Guarantee deposits (mainly rental guarantees and guarantees connected with the running of a temporary staffing business) that do not have a fixed maturity date are recognised at cost. Guarantee deposits that do have a fixed maturity date are initially recognised at fair value and subsequently at amortised cost using the effective interest method Associates Associates are interests held over which the group has significant influence (not being subsidiaries over which the group may exercise decision-making control). In general the interest held is 20% to 50% of the voting rights. Associates are recognised using the equity method. They are initially recognised at cost in the financial statements. Changes in valuation as a result of attributable results from the associates are recognised in the income statement Trade and other receivables Trade and other receivables are initially recognised at fair value and subsequently at amortised cost using the effective interest method (often nominal value) less impairment for doubtful receivables. Reasons for recognising a provision doubtful receivables include major financial problems on the part of the debtor or the passing of more than 365 days after the payment due date. Experience shows that if a receivable has not been collected more than 365 days after the agreed payment date, it is unlikely that it will be collected. The amount of the provision is the difference between the carrying amount of the receivable and the present value of expected future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced by the amount of the provision doubtful receivables and the associated expenses are included in selling expenses in the income statement. If a trade receivable or other receivable is uncollectible, it is charged to the provision doubtful Trade receivables are not recognised in the balance sheet if they are sold to a factoring company and the contractual rights to these receivables have been transferred. The criterion applicable in this context is the substantial transfer of risks and rewards. Factoring fees are recognised as selling expenses Derivative financial instruments Derivative financial instruments are initially recognised in the financial statements at fair value on the date the contract is concluded and are subsequently recognised at fair value at each reporting date. Changes in the fair value of derivative financial instruments are recognised directly in the income statement, unless hedge accounting is applied. In the event the group applies hedge acounting, its effectiveness is documented when hedging. The effectiveness of the hedge is then determined at regular intervals, either by comparing the critical features of the hedging instrument with the hedged position, or by comparing the fair value change of the hedging instrument and the hedged position. The group applies cash flow hedge accounting to interest rate derivatives entered into to hedge future cash flows from interest on its non-current borrowings. When applying cash flow hedging the effective portion of the revaluation of the hedging instrument is directly recognised in equity. At such time as the results of the hedged position are recognised in the income statement, the associated result is transferred from equity to the income statement and recognised in the same item in the income statement. The fair value of the derivative instrument is classified as a fixed asset or a non-current liability if the derivative instrument has a remaining maturity of more than 12 months, or as a current asset or liability if the remaining maturity is less than 12 months. To be able to recognise the ineffective part of the revaluation in the correct period in the income statement the group at each balance sheet date recognises the lowest absolute amount of either of the following two valuations changes in equity: the cumulative revaluation of the hedging instrument since the hedge relationship was indicated; and the cumulative change in the value of future hedged cash flows insofar as it can be attributed to hedged risk.

97 The cash flow hedge accounting is terminated when: the hedging instrument is sold, ended or exercised. The cumulative result on the hedging instrument that was recognised directly in equity when it was still deemed to be an effective hedge continues to be recognised in equity until the initially hedged future transaction takes place; the hedge relationship no longer complies with the criteria for hedge accounting. If the hedged future transaction has yet to take place, the associated cumulative result on the hedging instrument is recognised in equity. If the transaction will no longer take place the cumulative result recognised in equity is recognised in the income statement Cash and cash equivalents Cash and cash equivalents, including cash in hand, bank balances and readily available deposits, are recognised at nominal value. Bank overdrafts are classified as borrowings on the balance sheet under current liabilities Share capital Share capital is defined as equity attributable to equity holders of the company. Costs directly connected to the issuance of new shares or option rights are deducted from the proceeds recognised in equity. If any entity belonging to the group purchases USG People N.V. shares, the amount paid, including any associated costs (after income tax), is charged to equity attributable to equity holders of the company until such time as the shares are cancelled or reissued. The amount received on the issue of shares previously purchased, less any associated costs (after income tax), is added to the equity attributable to equity holders of the company Dividend Dividend is recognised as a liability for the period in which the distribution is approved by the shareholders. If shareholders are offered the option between a stock dividend or a cash dividend, the stock dividend is recognised as the amount in cash which the shareholders did not elect to receive Non-current interest-bearing borrowings Borrowings are initially recognised in the financial statements at fair value, net of transaction costs incurred, and are subsequently recognised at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowing using the effective interest method. Borrowings are classified as current liabilities unless the group has the intention and an unconditional right to postpone settlement of the liability for at least 12 months after the balance sheet date Lease Lease contracts whereby the risks and rewards associated with ownership lie wholly or primarily with the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement for the duration of the lease using the straight-line method. Lease contracts whereby the risks and rewards associated with ownership actually lie with the group are classified as finance leases. Assets acquired via a finance lease are carried at the lower of fair value and the present value of the minimum required lease payments at the start of the lease. The lease payments are recognised partly as settlement of the outstanding liability and partly as finance costs. The interest expense is charged to each period in the entire lease period in such a way that it results in a constant periodical interest rate on the outstanding balance of the liability. Property, plant and equipment acquired via a finance lease are depreciated over the shorter of the useful life and the duration of the lease contract Current and deferred income tax assets and liabilities Income-based tax on the income for the financial year comprises current and deferred income taxes for the period under review. Income-based tax is recognised in the income statement except where it relates to items booked in comprehensive income or directly in equity. In the latter case, the associated tax is also recognised in comprehensive income or equity. Current income tax consists of income-based tax on the taxable income, calculated on the basis of tax rates and legislation that has been enacted or substantially enacted at the balance sheet date. Management periodically monitors the positions taken when filing tax returns, taking into account various legal interpretations. If necessary, liabilities are recognised based on expected tax liabilities. Deferred income tax is recognised in the consolidated financial statements for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. However, deferred income tax liabilities are not carried when initially recognising goodwill. Deferred income tax is calculated using tax rates and legislation that has been enacted or substantially enacted at the balance sheet date and are expected to apply when the deferred income tax asset concerned is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised insofar as it is probable that future taxable profit will be available to offset the temporary differences and available tax losses. CONSOLIDATED FINANCIAL STATEMENTS 095

98 Deferred income tax assets and liabilities are offset if there is a legally enforceable right to do so and if the taxes are levied by the same authority Pension-related liabilities Defined contribution pension schemes A defined contribution scheme is a pension scheme whereby the group makes fixed contributions to a pension insurer or pension fund. Liabilities regarding contributions to pension and pensionrelated schemes based on defined contributions are recognised as expenses in the income statement in the period to which they pertain. The group has no obligations other than the payment of premiums Defined benefit pension schemes A defined benefit scheme is a pension scheme whereby the employee receives an amount in pension benefits on retirement, usually dependent on factors such as age, years of service and remuneration. The group s net liability in regard to allocated pension rights is determined separately for each scheme, on the basis of the present value of the liability under the defined benefit pension scheme at balance sheet date, less the fair value of the plan assets (defined as the cash value of the related liability as described in IAS ). The discount factor is the return at balance sheet date on solid corporate or government bonds with a maturity similar to the term of the group s liabilities. The calculations are performed by certified actuaries using the projected unit credit method. Actuarial gains and losses arising from changes in actuarial assumptions are added or charged to total comprehenisve income. In the event of changes in the pension scheme, unrecognised pension costs for years of service completed are recognised directly in the income statement Share-based remuneration The fair value of shares granted conditionally (settled in shares) under the group s share plan ( Unique Share Plan ), including the group-paid wage tax relating to these shares (settled in cash), is recognised as an expense in the income statement. Non-market related performance conditions such as revenue, profitability and expected staff turnover are included in the estimate of the ultimate total number of shares to be granted. The estimate of the ultimate total number of shares to be granted is revised at balance sheet date on the basis of the performance conditions. The actual performance conditions and staff turnover are determined at the end of the performance period and on the date that the granting becomes unconditional. Any effect of this revision and final determination is recognised in the income statement. The expenses are recognised on a time-weighted basis over the period to which the performance pertains. In the event of cancellation, either at the initiative of the staff member or of the employer, unrealised expenses pertaining to the period between the cancellation and the end of the performance period are recognised at once as an expense in the income statement. A legal reserve is maintained in equity for the expected expense based on fair value of the shares to be granted, as determined on the day of granting. The expenses relating to the tax commitments for participants in the share plan payable by the group are recognised at fair value, as determined on the reporting date and at the time of settlement. These expenses are recognised on a time-weighted basis over the period to which the performance pertains and in the financial statements under the provisions. In addition to the aforementioned share plan, the group has issued Stock Appreciation Rights (SARs). The fair value of the granted SARs (settled in cash) is recognised as an expense in the income statement. The total amount recognised as an expense in the income statement during the performance period is determined by the fair value of the (conditionally) granted SARs. The USG People N.V. share price is a market-related condition which partly determines the fair value. Expected staff turnover is included in the estimate of the ultimate amount to be paid. This estimate is revised at balance sheet date. Actual staff turnover is determined on the date on which granting becomes unconditional. The effect of this revision and final determination is recognised in the income statement. Expenses are recognised on a time-weighted basis over the conditional period of the SARs. A provision is maintained for this purpose Provisions General A provision is recognised on the balance sheet where the group has a legally enforceable or constructive obligation relating to an event in the past and where it is probable that settlement of that obligation will involve an outflow of funds and that the amount is estimated reliably. Where the effect of this is material, provisions are determined by calculating the present value of estimated future cash flows using a pre-tax discount factor which reflects the current market assessment of the time value of money and, if necessary, specific risks connected with the commitment. Future losses are not accounted for Restructuring provisions Provisions are made for restructuring if the group has finalised a detailed restructuring plan and the restructuring has been either started or announced publicly. The restructuring provision does not include costs relating to future operations.

99 Personnel-related provisions The group recognises provisions for future benefit payments to employees. These provisions take into account any future wage increases and staff turnover. The provisions include long-service awards and continuation of wage payment during extended periods of sickness Trade and other payables Trade and other payables are initially recognised at fair value and subsequently at amortised cost using the effective interest method Income Revenue Income is recognised insofar as it is probable that the economic benefits will flow to the group and insofar as the income can be measured reliably. The group s income is derived from the provision of services to third parties after deduction of value added tax and discounts granted. These services mainly concern: Temporary employment and secondment services: provision of temporary staff whereby hours worked at agreed rates during the financial reporting period are recognised as revenue; Recruitment and selection services: recruitment and selection of employees for third parties whereby revenue is booked once the service has been completed as agreed; Call centre services: handling of telephone operations for third parties. The revenue consists of units (call units or conversations) relating to the reporting period and at an agreed rate; Reintegration services: supporting of reintegration services for third parties based on an hourly rate, for hours worked during the reporting period; IT and engineering projects: fees based on a set price are recognised as revenue based on the number of hours worked during the reporting period compared to the estimated total number of hours needed for the project; and Outplacement: provision of coaching to jobseekers. Revenue is determined on the basis of the amount of time to be declared during the reporting period for each person being coached compared to the estimated total amount of time to be spent on each person being coached. assets or debts and associated interests Finance costs and income Finance costs comprise interest due on funds drawn, calculated using the effective interest method, downward adjustments to the fair value and realised value of derivative financial instruments and interest recognised with respect to accrued interest on contingent considerations relating to acquisitions. Finance income comprises interest received on outstanding monies and upward adjustments to the fair value and realised value of derivative financial instruments Net earnings per share Net earnings per share are calculated as the net income attributable to shareholders divided by the weighted average number of outstanding shares for the relevant period. Dividend distributed in shares, whereby there is no option for a cash settlement, is recognised as allocation of bonus shares. Earnings per share are adjusted accordingly in the comparative figures Basis of preparation for the statement of cash flows The statement of cash flows is compiled using the indirect method. The statement of cash flows distinguishes between cash flows from operating, investing and financing activities. Cash flows in foreign currencies are translated at the rate at the transaction date. Income and expenditure before income tax is recognised as cash flows from operating activities. Interest paid and received is included under cash flow from financing activities. Cash flows arising from the acquisition or divestment of financial interests (subsidiaries and associates) are recognised as cash flows from investing activities, taking into account any cash and cash equivalents in these interests. Dividends paid are recognised as cash flows from financing activities. Cash and cash equivalents in the statement of cash flows equals cash and cash equivalents on the balance sheet minus bank overdrafts. 3. FINANCIAL RISK MANAGEMENT If the group is the principal in a contract and the risks and rewards lie with the group, the transactions are recognised gross in the income statement. Revenue is recognised net if the group acts as an agent, e.g. as an intermediary. No revenue is recognised if there is major uncertainty as to whether the funds owing can be collected Other income and expenses Other income and expenses arise from activities other than regular business activities, such as the disposal of non-monetary 3.1. Financial risk factors Due to the nature of its activities, the group is exposed to various financial risks: market risks (cash flow and interest rate risks and exchange rate risks), credit risks and liquidity risks. The risk management and control model supports management in identifying and analysing the different risks. While the financial and economic crisis of the past few years has led to greater focus on financial risks, it did not have to result in a substantial change in the group s financial risk policy. The group is constantly focused on cost control. Specific attention CONSOLIDATED FINANCIAL STATEMENTS 097

100 is being paid to credit management, both in terms of managing credit risks and reducing the number of days sales outstanding. Risks are further reduced by insuring most trade receivables and selling some trade receivables to factoring companies. To further reduce liquidity risk the group optimised its finance structure in 2013 by means of a 60 million subordinated credit facility. In addition the syndicated credit facility was lowered from 700 million to 500 million. Please refer to note 22 Noncurrent interest-bearing borrowings for further details. Group risk management focuses on minimising the potential negative effects of developments on the financial markets on the group s performance. If deemed necessary, the group uses financial instruments to hedge certain risks. The treasury department identifies and assesses financial risks and hedges them subject to approval by the Executive Board.

101 The group recognises the following categories of financial instruments: 31 DECEMBER 2013 RECEIVABLES AND LOANS DERIVATE INSTRUMENTS SUBJECT TO HEDGE ACCOUNTING FAIR VALUE MAXIMUM CREDIT RISK Financial fixed assets 26,954-22,339 30,674 Trade receivables 261, , ,334 Other receivables (being financial instruments) 4,286-4,286 4,286 Cash and cash equivalents 63,965-63,965 63, , , ,259 Syndicated credit facility 149, ,034 Subordinated credit facility 58,118-60,249 Other non-current credit facilities 2,215-2,611 Commercial paper programmes 17,466-17,466 Bank overdrafts and borrowings 15,018-15,018 Trade and other payables (being financial instruments) 387, ,132 Derivative financial instruments , , DECEMBER 2012 RECEIVABLES AND LOANS ASSETS & LIABILITIES MEASURED AT FAIR VALUE IN THE INCOME STATEMENT FAIR VALUE MAXIMUM CREDIT RISK Financial fixed assets 14,742-7,931 15,907 Trade receivables 374, , ,237 Other receivables (being financial instruments) 4,813-4,813 4,813 Cash and cash equivalents 35,355-35,355 35, , , ,312 Start subordinated loan 18,241-18,225 Syndicated credit facility 213, ,288 Contingent consideration acquisitions 2,061-2,061 Other non-current credit facilities 2,383-2,790 Commercial paper programmes 28,941-28,941 Bank overdrafts and borrowings 13,953-13,953 Trade and other payables (being financial instruments) 471, ,477 Derivative financial instruments - 6,228 6, ,735 6, ,963 CONSOLIDATED FINANCIAL STATEMENTS 099

102 Market risks Cash flow and interest rate risk Funds drawn from borrowings granted at variable interest rates expose the group to cash flow and interest rate risks. On the one hand the group, as a provider of employment services, views variable interest rates as a natural hedge for fluctuations in operating income while, on the other hand, it wants to remain vigilant and be able to respond to any opportunities that arise. The group regularly uses various simulated scenarios to ascertain whether existing measures to hedge the cash flow and interest rate risks remain adequate. The analysis focuses on the effects of interest rate changes on income, due to the fact that the vast majority of the loans were granted at a variable interest rate, with the risk partly hedged by derivative financial instruments. An increase of 50 basis points in the EURIBOR rate has a negative impact of 1.6 million on income before taxes (2012: negative impact of 0.9 million) and a decrease in equity of 0.8 million (2012: 0.6 million), taking hedging measures into account and with all other factors being equal. A decrease of 50 basis points in the EURIBOR rate has a positive impact of 1.6 million (2012: positive impact of 1.2 million) on income before taxes and an increase in equity of 0.8 million (2012: 0.8 million), taking hedging measures into account and with all other factors being equal. New derivative financial instruments were entered into at the end of 2013 to hedge the cash flow and interest rate risk. These are expanded on in note 27. As the group has no significant interest-bearing assets, group income is largely unaffected by interest rate fluctuations. internal guidelines approved by the Executive Board. Credit limits are assessed regularly. The treasury department maintains contacts with insurance companies and monitors the application of the main credit procedures. The group has an information system to closely track the creditworthiness of its customers. The system complements the services provided by the insurance company, making the credit risks more transparent. It combines the group s own information, purchased business information and credit reports issued by the credit insurer. Good results are achieved through periodical discussions with the insurance company and internal monitoring of the credit risks. Credit meetings are held monthly in all countries to discuss all aspects of the trade receivables. The Executive Board is informed regularly extensively on developments in its credit management policy. Note 18 Trade and other receivables provides a further analysis of the credit risks on trade receivables. The group only uses the banks which issued the syndicated loan for financial receivables such as cash and cash equivalents, derivative financial instruments and deposits Liquidity risks The treasury department makes sure that there are sufficient cash and cash equivalents and credit facilities available to manage liquidity risks. The group s liquidity is monitored based on forecasts and strategic plans. In addition, the group s liquidity is safeguarded through compliance with the terms and conditions of the syndicated credit facility and other borrowings. The Executive Board uses cash flow reports including forecasts to assess the liquidity risk. Currency exchange risk In view of the fact that group activities in currencies other than the euro are almost non-existent, exchange rate risks are not hedged. No borrowings are issued in a currency other than the euro (2012: 611) Credit risks Credit risks arise from trade receivables, cash and cash equivalents, financial derivatives and deposits held at banks. Trade receivables are generally insured by insurance companies (with at least an A rating S&P, Moody s, Fitch or A.M. Best). Receivables from governments and financial institutions in the Netherlands are not insured. Where a trade receivable is not insured, the client s creditworthiness is assessed prior to the service being supplied, taking past experiences and other considerations into account. Credit limits are assigned to clients based on information supplied by insurance companies or The principal conditions of the syndicated credit facility and the subordinated credit facility concern the senior leverage ratio (which needed to be kept equal to or below 3.0) and the interest coverage ratio (equal to or above 3.5). An additonal condition under the subordinated credit facility relates to the total leverage ratio (equal to or below 3.75 up to and including 31 December 2014 and falling to no more than 3.0 from 31 December 2016). The ratios are reported to the banks on a quarterly basis. At end an amount of 249 million (2012: 326 million) had not yet been used in the syndicated credit facility. Taking into account the senior leverage ratio and the total leverage ratio, the unused part of the credit facility was 117 million and 120 million, respectively. Total and senior leverage ratio The method of calculating the total leverage ratio and the senior leverage ratio is defined in the covenant with the banks. The calucation includes operating income, depreciation, amortisation and impairments for the discontinued business operations. The calculations on 31 December were as follows:

103 Bank loans and borrowings 241, ,258 Minus: cash and cash equivalents -63,965-35,355 Plus: adjustments in accordance with terms and conditions of covenant 9,423 6,490 Total net debt position in accordance with terms and conditions of covenant 187, ,393 Minus: Start subordinated loan - -18,241 Minus: subordinated credit facility -58,118 - Total net senior debt position in accordance with terms and conditions of covenant 129, ,152 Operating income 41, ,206 Plus: depreciation, amortisation and impairments 33, ,451 Plus: adjustments relating to divested and discontinued activities -25,848 2,704 Plus: adjustments in accordance with terms and conditions of covenant 33,375 12,248 EBITDA 82, ,197 Total leverage ratio (net debt position / EBITDA) Senior leverage ratio (net senior debt positon / EBITDA) The total leverage ratio in recent quarters was as follows: COVENANT ACTUAL 30 September December The senior leverage ratio in recent quarters was as follows: COVENANT ACTUAL 31 March June September December March June September December CONSOLIDATED FINANCIAL STATEMENTS 101

104 Interest cover ratio The method of calculating the interest cover ratio is defined in the covenant with the banks. The calculation includes the net finance costs of the discontinued business operations. The calculation on 31 December was as follows: Net finance costs 9,582 11,851 Minus: amortisation of costs of syndicated credit facility and convertible bond -1,942-4,285 Plus: adjustments in accordance with terms and conditions of covenant 6,452 8,169 Interest 14,092 15,735 Interest cover ratio (EBITDA / interest) The evolution of the interest cover ratio in recent quarters was as follows: COVENANT ACTUAL 31 March June September December March June September December The adjustments resulting from the terms and conditions of the covenant in the calculation of the interest cover ratio, the senior leverage ratio and the total leverage ratio concern adjustments ensuing from the agreements made with the banks in the covenant with respect to the valuation of companies consolidated and deconsolidated in the course of the year, non-operating expenses, the unrealised valuation result on derivatives, extraordinary adjustments with regard to defined benefit pension schemes and the impact of the application of amended IAS 19 and the amended IFRS 3 on investments in subsidiaries.

105 Conditions and repayment terms The table below states the repayment terms of the group s financial commitments. The amounts listed in the table are contractually agreed cash flows which have not been discounted. Conditions and repayment terms in 2013 based on the nominal value including interest due TOTAL < 3 MTH 3-6 MTH 6-12 MTH 1-2 YEARS 2-5 YEARS > 5 YEARS Syndicated credit facility 155, ,071 2, ,238 - Subordinated credit facility 71,201 1,004 1,015 2,053 4,072 63,057 - Other credit facilities 2, , Commercial paper programmes 17,466 17, Bank overdrafts and borrrowings 15,018 15, Trade and other payables 387, , Derivative financial instruments , ,327 1,582 3,194 6, , The term of the syndicated and subordinated credit facilities ends in USG People consults with its banks on a regular basis to achieve timely refinancing. Conditions and repayments terms in 2012 based on the nominal value including interest due TOTAL < 3 MTH 3-6 MTH 6-12 MTH 1-2 YEARS 2-5 YEARS > 5 YEARS Start subordinated loan 18,390 18, Syndicated credit facility 226, ,627 3, ,137 - Contingent consideration acquisitions 2,061 1, Other credit facilities 2, , Commercial paper programmes 28,941 28, Bank overdrafts and borrowings 13,953 13, Trade and other payables 471, , Derivative financial instruments 6,255 2,686 2,559 1, , ,742 3,377 2,637 3, , CONSOLIDATED FINANCIAL STATEMENTS 103

106 Capital risk management Capital risk management is aimed at safeguarding the continuity of the group, making returns available for shareholders and proceeds for other stakeholders, and maintaining an optimum capital structure with a view to reducing the costs of capital. To maintain or amend the capital structure, the group can adjust the dividend, pay back capital to shareholders, issue new shares or divest assets to reduce liabilities. The group s long-term objective is for the debt position to be such that the total leverage ratio is equal to or below 2.0. To this end the group monitors working capital and pursues an investment policy focused on generating positive cash flows from income Estimating fair value The group implements the following hierarchy for the disclosure of financial instruments recognised at fair value: Level 1: market prices for financial instruments traded on an active market; Level 2: information other than market prices for the fair value of financial instruments that are not traded on an active market. The group uses various methods and makes assumptions based on market conditions at the balance sheet date. For non-current debt it uses market prices or market prices given by traders for comparable instruments; and Level 3: other methods, including estimated present value calculations, are used to determine the valuation of other financial instruments. The group discounts its financial instruments using the effective return relevant to its risk profile and the maturity of the financial instrument at the balance sheet date. The following interest rates are used: Non-current receivables 4.2% 4.1% Non-current borrowings 1.4% 1.5% Subordinated loans 6.8% 5.3% The fair value is determined by discounting the relevant cash flows using the present discount rate (see above) applicable to comparable instruments. 4. ESTIMATES AND JUDGEMENTS BY MANAGEMENT Estimates and judgements are constantly assessed and based on historical experience and other factors including expectations of future events which, under the circumstances, are deemed to be reasonable. The group makes estimates and assumptions regarding future developments. An estimate is by definition rarely identical to the actual outcome. Estimates and assumptions which could lead to material adjustments in the carrying amount of assets and liabilities in the coming financial year are disclosed below. Only derivative financial instruments (note 27) are carried at fair value in the balance sheet (level 2). The principal methods and assumptions used to estimate the fair values as stated in 3.1 are summarised below: Interest-bearing borrowings and debts: the fair value is calculated using the present value of expected future cash outflows arising from repayments and interest payments. Financial fixed assets: the fair value is calculated using the present value of expected future cash inflows arsing from repayments and interest payments. The fair value of non-interest bearing guarantee deposits with no fixed maturity is equal to nil. The fair value of interest-bearing guarantee deposits with a fixed maturity is estimated using the discounted cash flow method. Trade receivables, trade payables, other receivables and payables being financial instruments: for current receivables and payables with a maturity of less than one year the fair value is equal to the nominal value. The fair value of other receivables and payables is calculated using the discounted cash flow method. Derivates: the fair value of derivatives is determined using reports from the banks with whom the derivatives have been agreed. The value of derivatives is determined by the banks using Black-Scholes for i-rates. Estimated impairment of goodwill The group tests whether its goodwill is subject to impairment at least once a year. The recoverable value of cash-generating units is determined according to value in use, which is calculated by discounting expected future cash flows using a discount factor derived from the weighted average cost of capital. This is based on assumptions which may deviate from actual results. Sensitivity analyses with regard to the assumptions used to determine the value in use are included in note 14. Taxes The ultimate tax consequences of some transactions and calculations are uncertain, partly because of uncertainty regarding their timing. The group makes provisions for possible extra tax liabilities arising from tax audits. Where the actual tax sums differ from the amounts initially recognised this will have consequences for the tax burden and resulting (deferred) income tax receivables and (deferred) income tax liabilities in the period in which the differences become apparent. In addition the value of deferred income tax is based on assumptions which may differ in reality. Note 17 provides a sensitivity analysis with regard to the assumptions used.

107 Pension-related liabilities and provisions Provisions are made for future outgoing cash flows where it is uncertain whether a cash flow will in fact emerge and in the event of uncertainty about the size and timing of the cash flow. The actual outcome may deviate from the assumptions used to determine the size of provisions and may have an impact on results achieved in the period in which the differences emerge. Notes 23 and 24 elaborate on the sensitivity of assumptions and provide further information on specific provisions. Contingent assets and liabilities There is uncertainty about the group s contingent assets and liabilities; please refer to note 31 for further information. Derivative financial instruments Derivative financial instruments are recognised at fair value, taking into account the future development of interest rates. Actual developments can differ from this assumption. Note provides a sensitivity analysis with regard to the interest rates used, taking into acount the effect of changes in the value of derivative financial instruments on equity. 5. ACQUISITIONS AND DIVESTMENTS OF SUBSIDIARIES The acquisitions and divestments of subsidiaries are described below. The initial valuation of the assets and liabilities from acquisition as at the date of acquisition was as follows: FAIR VALUE 2013 Trademark 469 Customer relationships 914 Software 580 Financial fixed assets 3 Property, plant and equipment 29 Trade and other receivables 1,046 Cash and cash equivalents 502 Non-current borrowings -225 Deferred income tax liabilities -346 Current income tax liabilities -15 Trade and other payables -1,355 Non-controlling interest 49% -785 Acquired assets and liabilities 817 Goodwill 3,894 Consideration transferred 4, Acquisitions Acquisitions in 2013 The following acquisition in a subsidiary took place: SUBSIDIARY ACQUIRED % OF SHARES DATE OF ACQUISITION Adver-Online B.V. 51% 24 April 2013 Adver-Online B.V. is a company established in 2005 that provides advisory services and services in the field of online recruitment and selection, as well as online HR services. One of the objectives of Adver-Online B.V. is to become an online temporary staffing organisation in the European market with its HR Office online platform. The consideration transferred was 4,711. This fixed acquisition price is accompanied by a variable consideration of up to 755. The amount of this consideration depends on Adver-Online B.V. achieving targets for future financial results. CONSOLIDATED FINANCIAL STATEMENTS 105

108 The intangible assets identified separately relate to the trademark, customer relationships and software. The actual value of the trademark is based on the expected royalty percentage payable by a third party for use of the brand (level 3). The actual value of the customer relationships and software is determined based on the expected discounted cash flows achieved with the asset (level 3). The fair value of the other assets and liabilities is equal to the carrying value. Trade and other receivables mainly consists of trade receivables and were deemed to be fully recoverable as from the date on which they were acquired. The 785 non-controlling interest is based on the proportional share in the actual value of the identifiable assets and liabilities. The goodwill is attributable to the possibilities that the acquisition offers the group to expand its online HR services strategy and it is therefore an addition to the existing services portfolio. The goodwill is not deductible for tax purposes. The reconciliation of the outflow of cash and cash equivalents in the statement of cash flows is as follows: 2013 Consideration transferred paid 4,711 Minus: cash and cash equivalents in acquired subsidiary -502 OUTFLOW OF CASH AND CASH EQUIVALENTS AS A RESULT OF ACQUISITION 4,209 In 2013 Adver-Online B.V. contributed 2,583 to group revenue and 62 to group net income. The contribution would have been 4,032 to revenue and 112 to net income if the acquisition had taken place on 1 January The transaction fees for the acquisition amount to 10 and were recognised in the income statement under general and administrative expenses. Acquisitions in 2012 In 2012 the following acquisitions in subsidiaries took place: DATE OF SUBSIDIARY ACQUIRED % OF SHARES ACQUISITION Control Finance B.V. (the Netherlands) 100% 2 April 2012 Mobiliteit Holding B.V. (the Netherlands) 100% 2 May 2012

109 The operations of the acquired companies relate to flexible labour and employment placement and outsourcing. Control Finance B.V. is focused on the flexible staffing of highly-qualified professionals in the fields of accounting, financial management and controlling. Mobiliteit Holding B.V. is focused on chauffeur services provided by students. Both investments complement the activities of the group in Specialist Staffing and Professionals. The initial valuation of the assets and liabilities from acquisitions as at the date of acquisition was as follows: FAIR VALUE 2012 Trademarks 447 Customer relationships 5,398 Tangible and intangible assets 242 Trade and other receivables 3,149 Cash and cash equivalents 506 Provisions -546 Deferred income tax liabilities -1,252 Current income tax liabilities -85 Trade and other payables -2,538 Acquired assets and liabilities 5,321 Goodwill 10,856 Considerations transferred 16,177 The goodwill is predominantly attributable to expected synergies, the staff present and the complementary nature of the group s activities in the respective markets. The goodwill is not deductible for tax purposes. Trade and other receivables mainly consists of trade receivables and were deemed fully recoverable as from the date of acquisition. The reconciliation of the outflow of cash and cash equivalents in the statement of cash flows is as follows: 2012 Considerations transferred 16,177 Minus: contingent consideration -700 Considerations transferred paid 15,477 Minus: cash and cash equivalents in acquired subsidiaries -506 OUTFLOW OF CASH AND CASH EQUIVALENTS AS A RESULT OF ACQUISITIONS 14,971 Contingent considerations are considered to be financial debt and are recognised as borrowings in the balance sheet. The amount of this deferred consideration depends on the future results of the acquisition and was settled for 607 in In 2012 the contribution of the acquired subsidiaries to group revenue was 13,409 and the contribution to group net income was 754. If the acquisitions had taken place as at 1 January 2012, then the contribution to revenue would have been 18,982 and the contribution to net income would have been 985. The transaction fees for the acquisitions amount to 149 and were recognised in the income statement under general and administrative expenses. CONSOLIDATED FINANCIAL STATEMENTS 107

110 5.2. Divestments Divestments in 2013 The group divested the subsidiaries belonging to USG Energy and the subsidiaries belonging to the General Staffing activities in Spain, Italy, Austria, Switzerland, Poland and Luxembourg. The financial information of these subsidiaries is included in the income statement for 2013 for the period during which the group had control over the respective subsidiaries. The comparable figures for 2012 have been restated as a result of the divestment. Divestments in 2012 In December 2012 the group divested its subsidiary Inter Re. The financial details of this subsidiary have been included in the 2012 income statement for the period for which the group had control of the subsidiary. The divestment of the General Staffing activities is recognised as a discontinued operation in accordance with IFRS 5. Net income achieved in the first half of 2013 is recognised in the income statement as net income from discontinued operations Net income from divested activities The breakdown of net income from discontinued activities in the income statement is as follows: Net income on divestment of USG Energy 28,688 - Net income on divestment of Inter Re - 5,620 NET INCOME FROM DIVESTMENTS 28,688 5,620 USG Energy In March 2013 the group sold the subsidiaries of USG Energy. The reconciliation of the amount of the inflow of cash and cash equivalents in the statement of cash flows is as follows: Inflow of cash and cash equivalents as a result of divested subsidiaries 80,290 Cash and cash equivalents in divested subsidiaries -10,782 DIVESTMENT OF SUBSIDIARIES IN STATEMENT OF CASH FLOWS 69,508 The assets and liabilities connected with the divestment are as follows: Property, plant and equipment 636 Goodwill 38,223 Other intangible assets 53 Trade and other receivables 12,904 Cash and cash equivalents 10,782 Provisions -638 Trade and other payables -9,797 Current income tax liabilities -644 Divested assets and liabilities 51,519 Consideration received 80,290 Divested assets and liabilities -51,519 Realisation of currency translation differences -83 Net income from divestments 28,688

111 Inter Re In December 2012 the group divested its subsidiary Inter Re. The reconciliation of the outflow of cash and cash equivalents in the statement of cash flows is as follows: 2012 Inflow of cash and cash equivalents as a result of divested subsidiary 29,940 Cash and cash equivalents in divested subsidiary -33,468 DIVESTMENT OF SUBSIDIARY IN STATEMENT OF CASH FLOWS -3,528 The assets and liabilities connected with the divestment are as follows: 2012 Cash and cash equivalents 33,468 Deferred income tax liabilities -9,147 Trade and other payables -1 Divested assets and liabilities 24,320 Minus: consideration received 29,940 Net income from divestments 5,620 CONSOLIDATED FINANCIAL STATEMENTS 109

112 Net income from discontinued operations The breakdown of net income from discontinued operations is recognised in the income statement as follows: Net income from divestment of General Staffing activities -39,350 - Net income from General Staffing activities 1,060-50,163 NET INCOME FROM DISCONTINUED OPERATIONS -38,290-50,163 General Staffing activities In June 2013 the group divested the subsidiaries belonging to the General Staffing activities in Spain, Italy, Austria, Switzerland, Poland and Luxembourg. The reconciliation of the amount of the inflow of cash and cash equivalents in the statement of cash flows is as follows: Inflow of cash and cash equivalents as a result of divested subsidiaries 26,584 Cash and cash equivalents in divested subsidiaries -14,649 DIVESTMENT OF SUBSIDIARIES IN STATEMENT OF CASH FLOWS 11,935 Assets and liabilities resulting from the divestment are as follows: Property, plant and equipment 2,078 Goodwill 7,450 Other intangible assets 1,960 Financial fixed assets 284 Deferred income tax assets 17,224 Trade and other receivables 99,302 Cash and cash equivalents 14,649 Borrowings -2,752 Pension-related liabilities -625 Provisions -640 Trade and other payables -62,416 Current income tax liabilities -860 Divested assets and liabilities 75,654 Consideration received 26,584 Divested assets and liabilities -75,654 Income tax as a result of divestment transaction 14,080 Costs of guarantee scheme -3,940 Realisation of currency translation differences -420 Net income from divestment of General Staffing activities -39,350 Costs of guarantee scheme relates to a provision for the possible future outflow of funds as a result of the buyer making use of the guarantee scheme arising from the divestment. Please also refer to notes 24 and 31. The breakdown of net income from the discontinued General Staffing activities is as follows:

113 Revenue 209, ,250 Expenses -207, ,192 Result before income tax 2,458-47,942 Income tax expense -1,398-2,221 Net income from General Staffing activities 1,060-50, OPERATING SEGMENTS The organisation is structured according to the product-market combinations within which the group operates. The monthly information reported to the Executive Board, as chief operating decision maker, is in line with this. Group results are divided into the segments (General Staffing, Specialist Staffing and Professionals) and are then further analysed by country. The Executive Board bases its decisions on this information. The composition of a few operating segments changed in 2013 as a result of the more focused positioning of brands and changes in the senior management structure. The classification of the information reported to the Executive Board is in keeping with this change. The comparative figures for 2012 have been restated accordingly. The Executive Board evaluates the segments mainly on their revenue and EBITA. Finance results are not attributed to the segments due to the fact that cash resources are managed by the central Treasury department. The breakdown of the finance results and net income are therefore not provided. A number of operating segments have been incorporated in other due to their size. Revenue between operating segments is not material and is therefore not stated separately Segmentation of income 2013 REVENUE DEPRECIATION EBITA AMORTISATION AND IMPAIRMENT OPERATING INCOME The Netherlands 541,773-5,463 5, ,538 Belgium 352,478-3,224 10, ,710 France 459, ,272-14,272 General Staffing 1,353,942-9,608 30,537-1,017 29,520 The Netherlands 336,595-4,102 6,199-2,777 3,422 Belgium 182,346-1,467 17, ,585 Germany 221, ,273-6,373 2,900 Other 8, , ,163 Specialist Staffing 749,141-6,700 28,329-9,585 18,744 The Netherlands 113,653-1, ,518-2,368 Belgium 50, ,169 Other 3, , ,475 Professionals 166,948-1,815-3,545-3,467-7,012 Corporate , ,626 TOTAL 2,270,031-18,917 26,870-14,244 12,626 CONSOLIDATED FINANCIAL STATEMENTS 111

114 2012 RESTATED REVENUE DEPRECIATION EBITA AMORTISATION AND IMPAIRMENT OPERATING INCOME The Netherlands 574,162-4,840 19, ,586 Belgium 372,595-3,184 14,678-1,059 13,619 France 473,451-1,432 4,567-62,278-57,711 General Staffing 1,420,208-9,456 39,072-63,578-24,506 The Netherlands 337,403-3,681 9,991-6,200 3,791 Belgium 208,086-1,517 24, ,746 Germany 238, , ,664 Other 8, , ,905 Specialist Staffing 792,998-6,350 30, ,662-80,032 The Netherlands 163,273-1,685 12,860-3,163 9,697 Belgium 59, , ,191 Other 5, ,225 Professionals 228,748-2,154 16,107-4,444 11,663 Corporate , ,951 TOTAL 2,441,954-18,767 62, , ,826 The various types of services distinguished, as described in the accounting policies in note 2.22, are provided in every segment. No clients have a material share of revenue. The reconciliation of results per operating segment to net income from continuing operations is as follows: RESTATED Operating result in segmentation of income 12, ,826 Net income from divestments 28,688 5,620 Operating income 41, ,206 Finance costs and income -9,582-11,851 Income tax expense -19,513-18,876 NET INCOME FROM CONTINUING OPERATIONS 12, ,933

115 6.2. Segmentation of balance sheet 31 DECEMBER 2013 PROPERTY, PLANT AND EQUIPMENT GOODWILL INTANGIBLE ASSETS NET WORKING CAPITAL TOTAL The Netherlands 2, ,851 21,997-8, ,657 Belgium 2, ,500 5,301-20, ,112 France 2, ,025-47,347 General Staffing 7, ,351 27,976-78, ,422 The Netherlands 4, ,184 12,242-9, ,102 Belgium 1,026 36,717 2,937-12,462 28,218 Germany 1,952 96,983 6,012-11,384 93,563 Other Specialist Staffing 7, ,884 21,223-32, ,485 The Netherlands ,492 8,667 1,559 81,376 Belgium , ,421 9,905 Other 73 1, ,313 Professionals ,936 9,867-1,117 92,594 Corporate ,740-2,124 TOTAL 16, ,171 59, , , DECEMBER 2012 PROPERTY, PLANT AND EQUIPMENT GOODWILL INTANGIBLE ASSETS NET WORKING CAPITAL TOTAL The Netherlands 6, ,851 19,411-28,814 99,542 Belgium 2, ,500 5,903-16, ,490 France 2, ,321-36,349 Other 628 6, ,432 37,647 General Staffing 11, ,495 26,475-54, ,330 The Netherlands 5, ,186 12,599-18, ,641 Belgium 1,064 36,717 3,358-11,713 29,426 Germany 2,380 96,983 12, ,224 Other 1,571 1,302 1,664 6,036 10,573 Specialist Staffing 10, ,188 29,942-24, ,864 The Netherlands 2, ,823 10,500 2, ,296 Belgium ,389 1, ,737 Other 98 1, ,683 Professionals 2, ,267 12,782 2, ,716 Corporate 1, ,225-3,707 TOTAL 26, ,950 69,983-82, ,203 CONSOLIDATED FINANCIAL STATEMENTS 113

116 The reconciliation of assets per operating segment to the balance sheet is as follows: Property, plant and equipment 16,329 26,869 Goodwill 678, ,950 Intangible assets 59,974 69,983 Trade and other receivables 279, ,750 Trade and other payables -396, ,349 TOTAL 638, , COST OF SALES The breakdown of the cost of sales is as follows: RESTATED Wage and salary costs 1,385,125 1,470,427 Social security contributions 307, ,569 Premiums for defined contribution pension schemes 13,431 16,397 Other costs 76,985 79,310 1,783,088 1,906, SELLING, GENERAL AND ADMINISTRATIVE EXPENSES The breakdown of the selling, general and administrative expenses is as follows: RESTATED Employee costs 318, ,999 Depreciation, amortisation and impairment 33, ,459 Other expenses 122, , , ,094 Recognised in the income statement as: Selling expenses 355, ,201 Amortisation and impairment of acquisition-related intangible assets 14, ,684 General and administrative expenses 104,954 95, , ,094

117 The breakdown of employee costs is as follows: RESTATED Wages and salaries of indirect employees 224, ,183 Social security contributions 46,695 49,529 Premiums for defined contribution pension schemes 4,785 6,005 Costs of defined benefit pension schemes 1,920 1,115 Costs of share-based payments Other employee expenses 39,870 47, , ,999 The number of indirect employees (FTE) amounts to: RESTATED Number as at 31 December 4,793 5,209 Average throughout the financial year 5,057 5,329 The breakdown of amortisation and impairment of acquisition-related intangible assets is as follows: RESTATED Amortisation of trademarks, customer relationships and candidate databases 14,244 17,208 Impairment of goodwill - 161,476 14, , OTHER INCOME AND EXPENSES RESTATED Result on associates CONSOLIDATED FINANCIAL STATEMENTS 115

118 10. FINANCE COSTS RESTATED Interest on borrowings 6,348 9,898 Realised result on derivative financial instruments 6,230 9,221 Commitment fee on syndicated credit facility 1,789 1,663 Revaluation of French government loan Other interest expenses 990 1,635 Currency translation differences ,491 22,470 The unrealised value adjustment on derivatives is recognised as finance income. Information on the determination of finance costs can be found in note 22. The revaluation of the loan issued to the French government relates to the change in the market interest rate against which the cash flows from this loan are discounted. The interest received on this loan is lower than the market interest rate. Other interest expenses relates to interest on bank overdraft facilities. 11. FINANCE INCOME RESTATED Interest received 226 1,329 Unrealised result on derivative financial instruments 6,228 6,943 Revaluation of French government loan Valuation changes to contingent considerations 455 1,419 6,909 10,619 The unrealised result on derivative financial instruments relates to the revaluation of interest rate derivatives. The valuation changes to contingent considerations relating to acquisitions is the result of a reconsideration of the earn-outs which are to be paid for former investments in subsidiaries.

119 12. INCOME TAX EXPENSE RESTATED Current taxes 17,028 22,177 Deferred taxes 2,485-3,301 CHARGE IN FINANCIAL STATEMENT 19,513 18,876 Taxation on group profit before taxes differs as follows from the charge as calculated using the weighted average standard tax rate for consolidated entities: % 2012 RESTATED 2012 % RESTATED Income before tax 31, ,057 Taxation based on weighted average tax rates 12, % -30, % Non tax-deductible costs 4, % 4, % Tax-deductible tax on added value -2, % -2, % Non tax-deductible goodwill impairment , % Change in unrecognised losses 14, % % Reassessed income tax charge from previous years % 1, % Tax-exempt revenue -9, % -8, % Tax on added value 6, % 6, % Net income from divestments -7, % -1, % CHARGE IN FINANCIAL STATEMENT 19, % 18, % The weighted average nominal tax rate was 38.7% (2012: 24.9%). The change in the nominal tax rate compared to the previous year was due to a change in the composition of the results of subsidiaries in the various countries. The change in unrecognised losses mainly relates to the impairment of deferred income tax assets in Italy, France, the Netherlands, Belgium and Spain. In France a tax is charged on added value which is considered to be income tax. This tax is deductible for income tax purposes and is recognised in the above table as tax-deductible tax on added value. Tax-exempt revenue mainly relates to the notional interest allowance in Belgium and the tax measure. CONSOLIDATED FINANCIAL STATEMENTS 117

120 13. PROPERTY, PLANT AND EQUIPMENT BUILDINGS AND LAND FURNISHINGS AND CONVERSIONS COMPUTERS AND PERIPHERALS OTHER FIXED ASSETS TOTAL BREAKDOWN OF CARRYING AMOUNT AS AT 1 JANUARY 2012 Cost ,752 29,892 48, ,142 Cumulative depreciation and impairments ,758-25,372-38, ,493 Carrying amount as at 1 January ,994 4,520 10,339 33,649 CHANGES IN CARRYING AMOUNT Acquisition of subsidiaries Investments - 2,994 2,403 1,040 6,437 Disposals ,114 Depreciation -30-5,759-2,270-3,213-11,272 Impairments ,049 Currency translation differences Balance -30-3, ,709-6,780 BREAKDOWN OF CARRYING AMOUNT AS AT 31 DECEMBER 2012 Cost ,499 22,345 42, ,390 Cumulative depreciation and impairments ,409-17,962-35, ,521 Carrying amount as at 31 December ,090 4,383 7,630 26,869 CHANGES IN CARRYING AMOUNT Acquisition of subsidiaries Investments - 1,622 1, ,775 Disposals ,445 Depreciation -30-5,366-2,207-2,581-10,184 Currency translation differences Disposals relating to divestment of subsidiaries - -1, ,714 Balance -30-6,143-1,028-3,339-10,540 BREAKDOWN OF CARRYING AMOUNT AS AT 31 DECEMBER 2013 Cost ,944 14,761 30, ,946 Cumulative depreciation and impairments ,997-11,406-26,146-86,617 CARRYING AMOUNT AS AT 31 DECEMBER ,947 3,355 4,291 16,329 An amount of 4,757 (2012: 2,556) arising from the depreciation of property, plant and equipment has been included in the general and administrative expenses. Lease expenses totaling 45,917 (2012: 56,213) relating to cars and property leases are included in the income statement. Lease expenses in 2013 include an amount of 11,990 relating to the provision of future lease periods in connection with the merger of two head offices. No assets were financed by financial lease. Impairments in 2012 of 1,049 relate to the downward value adjustment of assets in Spain based on impairment testing.

121 14. GOODWILL Costs 1,014,103 1,003,701 Impairments -294,153-83,273 Carrying amount as at 1 January 719, ,428 Acquisition of subsidiaries 3,894 10,856 Adjustment of liability from acquisition of subsidiary Disposals relating to divestment of subsidiaries -45,673 - Impairments ,883 Currency translation differences - 3 Balance -41, ,478 Carrying amount as at 31 December 678, ,950 Costs 875,077 1,014,103 Impairments -196, ,153 CARRYING AMOUNT AS AT 31 DECEMBER 678, ,950 The acquisition and divestments are specified in more detail in note 5. The adjustment of the liability from acquisition of subsidiary in 2012 relates to an adjustment of an earn-out obligation. The respective acquisition took place prior to 2009, for which the adjustment of the additional liability was recognised in accordance with IFRS 3, which applied at the time. Goodwill is allocated to groups of cash-generating units. This allocation is based on the segment-focused reporting structure used by the Executive Board to monitor goodwill in 2013: General Staffing The Netherlands 102, ,851 General Staffing Belgium 141, ,500 General Staffing Austria - 6,143 Specialist Staffing The Netherlands 211, ,335 Specialist Staffing Belgium 21,893 21,893 Specialist Staffing Germany 96,983 96,983 Specialist Staffing Switzerland - 1,303 Professionals The Netherlands 70, ,825 Professionals Belgium 11,389 11,389 Professionals France 1,056 1,056 Secretary Plus The Netherlands 5,849 5,849 Secretary Plus Belgium 14,823 14, , ,950 The number of cash-generating units declined due to the divestment of subsidiaries in In addition the composition of a few cash-generating units changed due to the more focused positioning of brands particularly in the Netherlands as well as due to structural changes in senior management. CONSOLIDATED FINANCIAL STATEMENTS 119

122 14.1. Impairment for cash-generating units where goodwill is capitalised Cash-generating units are subject to annual impairment testing. Impairment testing involves comparing the carrying amount (goodwill, property, plant and equipment, intangible assets and working capital) of the cash-generating units concerned with their recoverable value. This recoverable value is determined by calculating their economic value. These calculations are based on future cash flows discounted using a pre-tax discount factor. For the group this resulted in a pre-tax discount factor between 9.2% and 17.4% (2012: between 6.9% and 24.0%). Future cash flows of cash-generating units are estimated based on actual income from operations and projected future performance, both of which are based on past performance, management expectations and assumptions about revenue growth, gross margin and cost developments for a period of seven years. This is reviewed against external data. Cash flow projections after this period are extrapolated using a growth rate of 1.0% (2012: 0.5%) for the entire group. The growth rate is based on expected inflation Specialist Staffing The Netherlands 4.6% 12.2% General Staffing The Netherlands 3.0% 12.4% General Staffing Belgium 3.6% 15.5% Specialist Staffing Germany 5.0% 12.6% Professionals The Netherlands 4.5% 12.2% 2012 ASSUMED PROJECTED AVERAGE REVENUE GROWTH ASSUMED PROJECTED AVERAGE REVENUE GROWTH PRE-TAX DISCOUNT RATE PRE-TAX DISCOUNT RATE Specialist Staffing The Netherlands 5.2% 12.0% General Staffing The Netherlands 2.7% 12.1% General Staffing Belgium 4.3% 15.8% Specialist Staffing Germany 9.2% 12.2% Professionals The Netherlands 4.6% 12.0% The divergence from the maximum five-year projection required under IAS 36 reflects past experience showing that a full market cycle in this sector lasts around seven years. The growth assumptions are based on a cyclical pattern which provides a favourable medium-term growth outlook in most countries due to a low penetration of flexible labour and a low degree of specialisation (specialist activities). The level of penetration is expected to rise in the future as a result of amendments in European legislation and regulations with regard to temporary staffing. The growth expectations of a number of cash-generating units are lower than last year due to delayed economic recovery. Actual operational results and future cash flow projections for the various cash-generating units are improving as a result of the slight economic improvement in Europe and USG People s focus on reducing operating expenses. Based on these expectations no impairment was recognised on goodwill, property, plant and equipment, and other intangible assets (2012: total of 215,042). The impairment test calculations take into account average annual revenue growth in mature markets of 4% to 6% during the first three years and 2% to 5% during the following four years. In the growth markets the calculations take into account average annual revenue growth of 9% to 11% in the first three years and 3% to 7% in the following four years. The expected average revenue growth and discount rate of the groups of cash-generating units where a significant part of the goodwill is allocated are on an annual basis as follows: IMPAIRMENT 2012 Goodwill 210,883 Property, plant and equipment 1,049 Other intangible assets 3, ,042 The costs of amortisation and depreciation are recognised as selling expenses in the income statement. Sensitivity analyses were performed for possible scenarios which can lead to impairment. The results of the sensitivity analyses for the groups of cash-generating units to which a significant part of the goodwill is attributed reveal the following: A 50 basis point rise in the pre-tax discount factor can lower the amount by which the value in use exceeds the carrying value by 11%. This would not result in an impairment. If revenue projections for 2014 are lowered by 10% and therefore also revenue levels for the years that follow, this could lower the amount by which the value in use exceeds the

123 carrying value by 50% and could result in a total impairment of 39 million. If the projections for EBITA as a percentage of revenue are lowered by 50 basis points the amount by which the value in use exceeds the carrying value can fall by 25% and result in a total impairment of 7 million. The other input variables used in sensitivity analysis calculations have been kept the same as the initial projections. In reality the various input variables will influence each other, meaning that the outcome of the analysis provides merely an indication of the impact of unilateral changes. General Staffing Belgium, Specialist Staffing Germany and Specialist Staffing the Netherlands are the most sensitive cash generating units. Last year Specialist Staffing Germany and General Staffing Belgium were also sensitive to fluctuations in economic assumptions. 15. OTHER INTANGIBLE ASSETS TRADEMARKS CUSTOMER RELATIONSHIPS CANDIDATE DATABASES SOFTWARE TOTAL BREAKDOWN OF CARRYING AMOUNT AS AT 1 JANUARY 2012 Cost 9, ,006 7,765 96, ,346 Cumulative amortisation and impairments -7,018-84,279-7,765-53, ,762 Carrying amount as at 1 January ,845 35,727-43,012 81,584 CHANGES IN CARRYING AMOUNT Acquisition of subsidiaries 447 5, ,886 Investments ,132 13,135 Disposals Amortisation -1,649-16, ,612-27,287 Impairments - -1, ,568-3,110 Currency translation differences Balance -1,199-12,169-1,767-11,601 BREAKDOWN OF CARRYING AMOUNT AS AT 31 DECEMBER 2012 Cost 10, ,405 7, , ,385 Cumulative amortisation and impairments -8, ,847-7,765-61, ,402 Carrying amount as at 31 December ,646 23,558-44,779 69,983 CHANGES IN CARRYING AMOUNT Acquisition of subsidiaries ,963 Investments ,117 14,117 Disposals Amortisation -1,179-13, ,006-23,311 Currency translation differences Disposals relating to divestment of subsidiaries ,203-2,013 Balance ,022-3,723-10,009 BREAKDOWN OF CARRYING AMOUNT AS AT 31 DECEMBER 2013 Cost 10, ,981 3, , ,737 Cumulative amortisation and impairments -9, ,445-3,824-56, ,763 CARRYING AMOUNT AS AT 31 DECEMBER ,536-48,502 59,974 CONSOLIDATED FINANCIAL STATEMENTS 121

124 An amount of 7,143 (2012: 6,961) arising from the amortisation of intangible assets has been included in the general and administrative expenses. The amortisation and impairment of trademarks and customer relationships of 14,244 (2012: 19,217) are recognised as selling costs. Accelerated amortisation of 685 (2012: 683) took place in 2013 in connection with a rebranding of trademarks. Investments in software includes an amount of 9,642 (2012: 7,170) related to software in development. Impairments in 2012 of 3,110 relate to the downward value adjustment of assets in General Staffing Spain based on impairment testing. The remaining useful life of the intangible assets is between one and nine years. 16. FINANCIAL FIXED ASSETS Long-term loan 10,963 10,302 Guarantee deposits 1,303 1,503 Capitalised transaction fees relating to syndicated credit facility 1,089 2,540 Receivable resulting from tax measure 13,186 - Associates BALANCE AS AT 31 DECEMBER 26,954 14,742 The long-term loan mainly relates to a legally required loan to the French government with a payment period of 20 years. The nominal value of this loan is 14,910 (2012: 13,597). The interest received on the loan is lower than the market interest rate, meaning that the carrying value is less than the nominal value. Guarantee deposits are intended as security for the lessor of leased premises and for payment of social security premiums and taxes. Capitalised transaction fees relate to the syndicated credit facility that was concluded in 2011 (note 22). Receivables resulting from tax measure is discounted for a period of three years. This is in line with both the expected settlement period and applicable legislation. The gain is recognised as cost of sales. The payment period of the financial fixed assets has not expired and no provision for non-payment has been made. Associates relates to several small interests maintained by the group. 17. DEFERRED INCOME TAX ASSETS AND LIABILITIES Deferred income tax asset: - Deferred income tax asset for settlement after 12 months 51,013 68,576 - Deferred income tax asset for settlement within 12 months 11,494 3,873 62,507 72,449 Deferred income tax liability: - Deferred income tax liability for settlement after 12 months 5,466 6,933 - Deferred income tax liability for settlement within 12 months 2,281 4,559 7,747 11,492 NET DEFERRED ASSET 54,760 60,957

125 CHANGE IN DEFERRED INCOME TAXES Balance as at 1 January 60,957 50,513 To income statement as continuing operations -2,497 3,301 To income statement as discontinued operations 13,948-1,186 Remeasurement of pension liability in comprehensive income Cash flow hedge in comprehensive income 12 - Acquisition of subsidiaries ,252 Divestment of subsidiaries -17,224 9,147 BALANCE AS AT 31 DECEMBER 54,760 60,957 Deferred income income tax asset and liability consists of: DEFERRED INCOME TAX ASSET Tax losses carried forward 50,238 52,778 Other 12,269 19,671 BALANCE AS AT 31 DECEMBER 62,507 72,449 The asset connected with tax losses carried forward relates mainly to Belgium, the Netherlands and Germany. The other deferred income tax asset item includes temporary differences for tax-deductible goodwill and restructuring provisions. The deferred asset is valued at the applicable nominal tax rates. Based on earnings prognoses for the coming years, the Executive Board has made an estimation of the probability of these assets being used in the coming years, taking into account countryspecific recoverability possibilities. The prognoses are in line with the assumptions used in impairment testing (note 14), supplemented with specific elements for the determination of the result for tax purposes. DEFERRED INCOME TAX LIABILITY Intangible assets 6,611 10,343 Other 1,136 1,149 BALANCE AS AT 31 DECEMBER 7,747 11,492 The other deferred income tax liabilities item includes temporary differences relating to capitalised costs of the syndicated and subordinated credit facility. CONSOLIDATED FINANCIAL STATEMENTS 123

126 Changes in non-capitalised tax losses carried forward are as follows: TAXES ON UNRECOGNISED LOSSES Balance as at 1 January 19,202 17,342 Additional taxes on unrecognised losses 14,765 2,305 Permanently unrecognisable losses -2, Divestment of subsidiaries -12,165 - BALANCE AS AT 31 DECEMBER 18,912 19,202 Additional taxes on unrecognised losses comprises losses that are not expected to be offset in the near future. Of these unrecognised losses, an amount of 14,725 has an unlimited settlement period with future taxable profits. The measurement of deferred taxes is based on growth and profitability assumptions which may differ from actual results. A 10% deviation from the revenue projections for 2014 and therefore also for revenue in the years that follow can result in a 4.9 million drop or 1.8 million rise in deferred income taxes. An 0.5% decrease or increase in projections for EBITA as a percentage of revenue can result in a 4.5 million drop or 2.6 million rise in deferred income taxes. 18. TRADE AND OTHER RECEIVABLES Trade receivables invoiced 247, ,626 Trade receivables to be invoiced 19,629 13,611 Total trade receivables 267, ,237 Minus: provision doubtful receivables -6,087-9,612 Trade receivables minus provision doubtful receivables 261, ,625 Other current receivables 4,286 4,813 Accrued income 14,370 19,312 BALANCE AS AT 31 DECEMBER 279, ,750

127 The age analysis on the trade receivables is as follows: Payment period has not yet expired 212, ,075 Payment period has expired: < 90 days 47,432 72, days 458 1,161 > 180 days 927 1,784 Total trade receivables not impaired 261, ,625 Trade receivables impaired 6,087 9,612 Total trade receivables 267, ,237 Trade receivables were sold in Belgium and France. Trade receivables were also sold in Germany from 2013 to maintain the level of factoring. The risks and rewards related to the receivables were transferred to factoring companies. The group may sell up to 150 million in trade receivables at any given time. At the end of 2013 trade receivables totalling million were sold (2012: 99.8 million). Of the trade receivables invoiced of 247.7million (including VAT), an amount of million was insured and the remaining 76.5 million was not. Of the uninsured amount 18.4 million concerns trade receiveables from government authorities. Of the trade receivables invoiced at the end of 2012 of million (including VAT), an amount of million was insured and million was uninsured. Of the uninsured amount 32.6 million concerned trade receivables from government agencies. In 2013 an amount of 0.4 million (2012: 1.4 million) was received from the insurance company as compensation for damages. Movement of the provision doubtful receivables is as follows: Balance as at 1 January 9,612 10,321 Provisions made during the year 3,212 6,397 Trade receivables impaired Released during the year -4,952-6,429 Currency translation differences 8-6 Divestment of subsidiaries -1,530 - BALANCE AS AT 31 DECEMBER 6,087 9,612 The creation of provisions doubtful receivables and releases from such provisions are recognised as selling expenses in the income statement. CONSOLIDATED FINANCIAL STATEMENTS 125

128 19. CASH AND CASH EQUIVALENTS AND BANK OVERDRAFTS Cash and cash equivalents as stated in the balance sheet 63,965 35,355 Bank overdrafts -15,018-13,953 CASH AND CASH EQUIVALENTS AND BANK OVERDRAFTS AS RECOGNISED IN THE CASH FLOW STATEMENT 48,947 21,402 An amount of 1,340 (2012: 1,027) is not freely available and is intended exclusively to cover guaranteed wage tax payments in the Netherlands. Cash and cash equivalents are lodged exclusively with financial institutions rated no lower than A (S&P, Moody s, Fitch or A.M. Best). 20. CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY HOLDERS 20.1.Share capital NUMBER OF SHARES (X 1,000) PAID-UP AND CALLED-UP SHARE PREMIUM TOTAL Balance as at 1 January ,449 39, , ,390 Stock dividend 1, Balance as at 31 December ,716 39, , ,390 Balance as at 1 January ,716 39, , ,390 Stock dividend BALANCE AS AT 31 DECEMBER ,484 40, , ,390 The authorised share capital as at 31 December 2013 and 2012 comprised 200 million shares with a nominal value of Holders are entitled to one vote per share at the company s shareholders meetings. On 3 June 2013 a dividend of 0.12 per share was distributed in cash or shares. The number of dividend rights giving entitlement to one new ordinary share with a nominal value of 0.50 was set at 49.82, while 38,251,943 shares were registered for the payment of stock dividend. 767,802 new ordinary shares were issued for this purpose. An amount of 4,976 was distributed in cash for the remaining shares. On 6 June 2012 a dividend of 0.17 per share was distributed in cash or shares. The number of dividend rights giving entitlement to two new ordinary shares with a nominal value of 0.50 was set at 65, while 41,189,526 shares were registered for the payment of stock dividend. 1,267,370 new ordinary shares were issued for this purpose. An amount of 6,334 was distributed in cash for the remaining shares Legal reserves The following breakdown of legal reserves applies: Share plan 1,442 1,622 Currency translation diffferences ,413 1,137

129 20.3. Retained earnings The legal reserve currency translation differences can be classified as a statutory reserve. As the reserve was negative at the end of 2013, an amount equal to the currency translation differences reserve may not be distributed from the free reserve. 21. EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS Average earnings per share in 2013 amounted to (2012 restated: ). The calculation of average earnings per share at 31 December 2013 is based on net income available to ordinary shareholders, equalling - 26,058 (2012 restated: - 191,179) and the weighted average number of outstanding shares in 2013, equalling 80,153 (2012: 79,169). The weighted average number of shares is calculated as follows: in thousands of shares Issued as at 1 January 79,716 78,449 Stock dividend Weighted average number of shares during the year 80,153 79,169 After the subordinated convertible bond was repaid in 2012 there was no longer a possibility of dilution as a result of the conversion of shares. A disclosure of diluted earnings per share is therefore no longer provided. Holders of ordinary shares are entitled to the distribution of dividends as approved by the General Meeting of Shareholders. During the General Meeting of Shareholders on 8 May 2014 a dividend for 2013 equal to 0.14 per share (total dividend of 11,268) will be proposed. The dividend proposal has not been recognised in these financial statements. 22. BORROWINGS This note contains information on the contractual terms of the non-current interest-bearing borrowings and liabilities. For more information on the interest risk exposure, reference is made to note Carrying amount of non-current interest-bearing borrowings and liabilities 209, ,364 Current portion of the borrowings , , ,671 CONSOLIDATED FINANCIAL STATEMENTS 127

130 Conditions and repayment terms for 2013 based on carrying amount TOTAL < 1 YEAR 1-2 YEARS 2-5 YEARS > 5 YEARS Syndicated revolving credit facility 149, ,042 - Subordinated credit facility 58, ,118 - Other non-current credit facilities 2, , , , Conditions and repayment terms for 2012 based on carrying amount TOTAL < 1 YEAR 1-2 YEARS 2-5 YEARS > 5 YEARS Start subordinated loan 18,241 18, Syndicated revolving credit facility 213, ,679 - Contingent considerations acquired subsidiaries 2,061 1, Other non-current credit facilities 2, , ,364 19, , Syndicated credit facilities In addition to the 700 million syndicated revolving and standby credit facility concluded in 2011 with a term of five years (July 2016), the group concluded a new 60 million subordinated credit facility in 2013 that expires on 31 December The agreed ratio covenants for the syndicated facility and the subordinated credit facility include a senior leverage ratio of a maximum of 3.0 and an interest coverage ratio of at least 3.5 (see note 3.1.3). The subordinated credit facility also stipulates that the total leverage ratio may not exceed 3.75 between 23 September 2013 and 31 December 2014, 3.5 between 1 January 2015 and 30 June 2015, 3,25 between 1 July 2015 and 31 December 2015 and 3.0 between 1 January 2016 and 31 December Both facilities also stipulate a maximum amount for acquisitions per year and over the entire term. The interest expenses on the portion of the syndicated credit facility that is taken up are calculated based on the one-month to six-month EURIBOR rate increased by an interest margin of between 95 and 165 basis points. The interest expenses on the subordinated credit facility are calculated based on the threemonth or six-month EURIBOR rate increased by an interest margin of between 625 and 700 basis points. The syndicated credit facility consists of two tranches, namely A and B. As a result of the repayment of the subordinated convertible bond in October 2012, tranche A was automatically increased by the amount of tranche C (stand-by credit facility). In 2013 the syndicated credit facility was lowered from 700 million to 500 million and it now consists of the following tranches: Tranche A ( 400 million, previously 600 million): revolving credit facility ( 150 million) of which 150 million was taken up at the end of 2013 and ancillary credit facilities ( 250 million), available in the form of short-term loans and bank guarantees from the syndicate of banks; and Tranche B ( 100 million): revolving credit facility and/or backstop facility reserved for a commercial paper programme of which an amount of 17 million had been allocated at the end of 2013 as a backstop to cover commercial paper issued. The bank and consultation fees paid when concluding the syndicated credit facility ( 5,061) have been recognised based on the use of the facility at the moment of withdrawal on 7 July 2011, of which: an amount of 1,836 is attributed to the loan taken up, and amortisation is calculated using the effective interest method. The effective interest rate of 2.6% applies to the liability component. The costs are deducted from the liability shown on the balance sheet; an amount of 1,048 is attributed to that part of the facility available for repayment of the subordinated convertible bond and the Start subordinated loan. These expenses are recognised as financial assets and depreciation expenses are charged to the income statement from the time the facility is used for the aforementioned repayments;

131 an amount of 2,176 is attributed to the remaining available part of the facility. These expenses are also recognised as financial assets and charged to the income statement using the straight-line method during the term of the facility (five years). In 2013 an accelerated repayment of 798 took place as a result of the lowering of the facility to 500 million. The bank and consultancy fees of 2,037 which were paid when the subordinated credit facility was taken out are attributed to the loan with amortisation taking place using the effective interest method. The effective interest rate of 6.74% applies to the liability component. The costs are deducted from the liability Movements in the syndicated credit facility are as follows: Carrying value of tranche A as at 1 January 213,679 98,326 Withdrawn - 114,999 Interest expenses 2,960 2,039 Interest paid -2,597-1,685 Repaid -65,000 - Carrying amount of tranche A as at 31 December 149, ,679 Movements in the subordinated credit facility are as follows: 2013 Carrying value of liability as at 1 January - Withdrawn 60,000 Recognised transaction fees -2,037 Interest expenses 1,231 Interest paid -1,076 Carrying amount of liability as at 31 December 58,118 Interest expenses and commitment fee The average interest rate on credit facility A in 2013 was 1.3% (2012: 1.4%). The commitment fee amounted to 1,789 in 2013 (2012: 1,663) and is recognised as finance costs in the income statement. The average interest rate on the subordinated credit facility was 6.8% in Other credit facilities Start subordinated loan In March 2003 a 100 million subordinated loan was concluded with the former shareholder of Start Holding B.V. (a subsidiary of USG People N.V.). The loan was repaid in instalments. The final instalment of 18.7 million was paid in October PENSION-RELATED LIABILITIES The group contributes to a number of defined benefit pension schemes which provide for pensions for employees when they reach retirement age. These schemes apply to part of the workforce in the Netherlands, France and Germany. The other countries where the group operates have defined contribution schemes and/or retirement provisions that comply with the national regulations and customs in those countries. The determination of annual costs for the year takes into account the nature of the scheme, which provides for indexation of pension entitlements insofar as the separate pension trusts investment proceeds exceed the actuarially required interest and insofar as surplus interest is available. The insured fully-financed obligations have a limited contractual term. CONSOLIDATED FINANCIAL STATEMENTS 129

132 PENSION-RELATED LIABILITIES RESTATED Present value of fully financed obligations 166, ,261 Minus: fair value of fund investments 163, ,234 Net liability of fully financed obligations 3,753 5,027 Present value of non-fully financed obligations 2,448 2,454 NET LIABILITY 6,201 7,481 The pension-related liabilities relate to pension schemes in the Netherlands, France and Germany. In Belgium the supplementary pensions act (Wet Aanvullende Pensioenen) requires that the employer guarantee a minimum return throughout the entire term of the contract with the insurer of 3.75% on the employee s contribution and of 3.25% on the employer s contribution. As such the defined contribution scheme qualifies as a defined benefit scheme. In the past these schemes were not recognised as such because results achieved in the past have up to now exceeded minimum return requirements. The ongoing low interest rate achievable on European financial markets is increasingly risky for employers. The financial impact on the liabilities was assessed on 31 December 2013 and was not deemed to be significant. For information puposes: the annual employer contribution was 1.2 million in 2013 while the fair value of the plan assets was 7.3 million.

133 23.1. Movement in pension liabilities and investments LIABILITIES INVESTMENTS TOTAL Balance as at 1 January 2012 restated 130, ,191 5,989 Service costs 2, ,897 Interest expenses 5,627-5, Restructuring-related adjustment Remeasurement: - Actuarial gains/losses as a result of changes in financial assumptions 31,219-29,497 1,722 - Actuarial gains/losses as a result of changes in demographic assumptions Actuarial gains/losses as a result of experiences -1,547 1, ,396-28,780 1,616 Employers contribution - -3,064-3,064 Members contribution Benefits paid -3,032 3,032 - Currency translation differences Balance as at 31 December 2012 restated 166, ,234 7,481 Balance as at 1 January , ,234 7,481 Divestment of subsidiaries -5,331 4, Service costs 1, ,889 Interest expenses 5,546-5, Restructuring-related adjustment Remeasurement: - Actuarial gains/losses as a result of changes in financial assumptions 3,248-3, Actuarial gains/losses as a result of changes in demographic assumptions Actuarial gains/losses as a result of experiences ,169-3, Employers contribution - -2,282-2,282 Members contribution Benefits paid -2,302 2,302 - BALANCE AS AT 31 DECEMBER , ,187 6,201 Actuarial gains/losses of (2012: 1,616) are recognised in comprehensive income after deduction of income tax (2012: 1,182). CONSOLIDATED FINANCIAL STATEMENTS 131

134 23.2. Expenses as recognised in the income statement Service costs 1, Interest expenses Restructuring-related adjustment Administration costs Total 1,920 1,115 These costs are recognised as personnel expenses in the income statement Principal actuarial assumptions Because the commitments of the pension insurer are virtually the same with respect to the amount and term as the payment commitments ensuing from the defined benefit pension plan, fair value is defined as the present value of the relevant commitment as set out in IAS This valuation policy is known as the fair value principle and both methods fit in this principle. The principal actuarial assumptions at the balance sheet date expressed as a margin spread: Discount rate as at 31 December 3.3%-3.5% 1.9%-4.2% Expected long-term rate of return on assets as at 31 December 3.3%-3.5% 1.9%-3.5% Future salary increases 0.6%-4.0% 0.6%-4.0% Future pension increases 0.5%-1.0% 0.5%-1.0% Future inflation 2.0% 1.3%-2.0% Calculations of the mortality rate at year-end 2013 for the Netherlands are based on the AG prognosis tables (-1/-1) (2012: AG (-1/-1)) and calculations for France are based on INSEE (2012: ). Calculations for Switzerland in 2012 are based on the BVG Generational mortality table. The interest rate sensitivity of the liability was 21.5 years at 31 December The sensitivity of the present value of the fully-financed obligations to the main assumptions applied is as follows: CHANGE IN ASSUMPTION IMPACT OF INCREASE OF ASSUMPTION IMPACT OF DECREASE OF ASSUMPTION Discount rate 0.5% +10% -10% Future salary increases 0.5% 0% 0% Future pension increases 0.5% +12% -10%

135 24. PROVISIONS RESTRUCTURING PROVISION PERSONNEL- RELATED PROVISIONS OTHER PROVISIONS TOTAL Balance as at 1 January ,106 4,400 32,529 69,035 Acquisition of subsidiaries Provisions added 10,219 6,375 3,273 19,867 Provisions used -19,693-1,319-2,810-23,822 Provisions reversed -10, ,324-12,177 Currency translation differences Balance as at 31 December ,598 9,188 31,668 53,454 Non-current 2,779 7,401 4,394 14,574 Current 9,819 1,787 27,274 38,880 Balance as at 31 December ,598 9,188 31,668 53,454 Balance as at 1 January ,598 9,188 31,668 53,454 Provisions added 40,268 5,469 10,165 55,902 Provisions used -19, ,339-29,768 Provisions reversed -3,475-1,013-5,562-10,050 Currency translation differences Divestment of subsidiaries ,278 Balance as at 31 December ,173 12,624 25,462 68,259 Non-current 15,781 5,142 15,375 36,298 Current 14,392 7,482 10,087 31,961 BALANCE AS AT 31 DECEMBER ,173 12,624 25,462 68,259 A provision of 40,268 was created in 2013 for restructuring of the activities. The provision relates to employee severance arrangements ( 15,390) and to the closure of branches and the merger of the two head offices ( 24,878). Of the costs, a sum of 24,540 is recognised as general and administrative expenses and 15,728 as selling expenses in the income statement. At the end of 2013 an amount of 24,514 (2012: 5,113) of the restructuring provision related to lease commitments on buildings that are no longer in use, while 5,659 (2012: 7,485) concerned employee severance arrangements. In both 2013 and 2012 parts of the restructuring provision were reversed as less of the provision was required for employee severance arrangements and better than initially expected prospects for letting vacant premises. The amount of the restructuring provision for vacant premises largely depends on the prospect of reletting these premises. The amount of the provision is amended if the prospects for letting vacant premises change. The personnel-related provisions include continuation of wage payment during extended periods of sickness, long-term service awards, payments upon termination of employment for reasons other than retirement and share plans settled in cash and cash equivalents. The provisions were determined on the basis of expectations concerning the recovery of sick employees, staff turnover and expected wage increases. The other provisions include an amount of 15,090 relating to the settlement of the CGZP/AMP case in Germany. Following a legal ruling in December 2010 the labour court in Berlin ruled on 30 May 2011 that the collective labour agreements concluded by CGZP/AMP in previous years were invalid, resulting in the possibility of claims against the group for these earlier years. These claims relate to the collection of social security contributions and subsequent payments to temporary employees. The authorities further examined the case in 2012 and 2013 and in 2013 the outcome became known. Based on the outcome of the examination the group lowered the provision by 4,500. The group appealed the size of the claim at the end of CONSOLIDATED FINANCIAL STATEMENTS 133

136 Other provisions relate to the settlement of a few legal proceedings. An amount of 8,022 of the used provision relates to the settlement of the liability with regard to the acquisition of subsidiary Allgeier DL in Germany in A 4,727 provision was created in 2013 for the possible future outflow of funds as a result of guarantees issued relating to the divestment of subsidiaries in the past. Expected projected future cash flows are discounted using a factor of 0.65% (2012: 1.0%) if their impact is material. A change of 100 basis points in the discount rate results in a 750 change in the existing value of the provision. 25. BANK OVERDRAFTS AND BORROWINGS Current portion of non-current borrowings 48 19,693 Bank overdrafts 15,018 13,953 Commercial paper programmes 17,466 28,941 32,532 62,587 USG People Interservices N.V., a subsidiary of USG People N.V., has a commercial paper programme with a total value of 100 million. A sum of 100 million from tranche B of the syndicated credit facility is reserved as a backstop to cover this programme. The maximum term of the loans concluded is three months. The finance costs are based on short-term EURIBOR. 26. TRADE AND OTHER PAYABLES Trade payables 35,490 45,194 Other payables 336, ,209 Accrued liabilities 24,332 28, , ,349 Trade and other payables are current debts. Other payables mainly consist of salaries payable, social security contributions and wage tax and value added tax due. Other payables in 2013 include 8.1 million (2012: 7.5 million) relating to undue payments by the factoring company. 27. DERIVATIVE FINANCIAL INSTRUMENTS The interest rate derivatives concluded in 2008 were settled on the expiration date of the contract in July In December 2013 the group concluded three new interest rate derivative contracts with a view to controlling the cash flow and interest rate risk. Hedge accounting in accordance with IAS 39 is applied to these new interest rate derivative contracts. The interest rate derivatives are assessed to be effective. The derivates have been agreed with the banks that issued the syndicated credit facility. The three new interest rate derivatives came into effect on 31 December 2013 for a period of three years for a total nominal

137 value of 42 million. The variable interest rate based on the 3-month EURIBOR is hedged at a fixed rate of 0.63% per year. At the end of 2013 the derivatives had a negative value of 46. The impact (after tax) on equity is The counterparties did not demand or provide any guarantees for the derivatives. participant has retained the shares obtained until the date of the General Meeting of Shareholders in 2014 and the participant is still in the employment of the group. The wage tax of the members of the Executive Board is payable by the group, which is recognised as a transaction settled in cash. 28. SHARE-BASED REMUNERATION Wages and salaries includes an amount of 378 (2012: 764) in costs relating to the granting of shares to key management and other employees. An amount of (2012: 606) was directly recognised in equity. The provisions include an amount of 1,238 (2012: 680) relating to share-based payments settled in cash and cash equivalents. The fair value is determined using the Black-Scholes model, with expected volatility being based on historic volatility over a period equal to the remaining term of the share plan and the risk-free interest rate being based on the zero coupon interest rate on government bonds applying to the remaining term of the share plan. The movements and the parameters were as follows: Unique Share Plan The Unique Share Plan covers the period from 1 January 2008 to 1 January The initial unconditional granting of 156,856 shares took place in May Additionally, 25% more shares will be granted in May 2014, provided the 2013 KEY MANAGEMENT 2014 OTHER 2014 SETTLED IN SHARES SETTLED IN CASH SETTLED IN SHARES Number of participants 4 25 Balance as at 1 January 15,541 7,683 Expired during the year ,670 Balance as at 31 December 15,202 5,013 Fair value Average share price for the determination of fair value Dividend yield 5% - 9% 0% 5% - 9% Volatility 41% - 50% 37% 41% - 50% Risk-free interest rate 1.4% - 4.2% 0.1% 1.4% - 4.6% CONSOLIDATED FINANCIAL STATEMENTS 135

138 In 2012 the movements and the parameters were as follows: 2012 KEY MANAGEMENT 2014 OTHER 2014 SETTLED IN SHARES SETTLED IN CASH SETTLED IN SHARES Number of participants 5 40 Balance as at 1 January 15,541 9,697 Expired during the year - -2,014 Balance as at 31 December 15,541 7,683 Fair value Average share price for the determination of fair value Dividend yield 5% - 9% 3% 5% - 9% Volatility 41% - 50% 49% 41% - 50% Risk-free interest rate 1.4% - 4.2% 0.0% 1.4% - 4.6% The intrinsic value at the date the shares were unconditionally granted was In determining fair value while taking into account a grossing up of the settlement due to the wage tax to be paid by USG People, the intrinsic value of share-based payments settled in cash is equal to the share price. Unique Share Plan The Unique Share Plan covers the period from 1 January 2011 to 1 January The unconditional granting of shares will take place in May 2015, after which a holding period of one year will apply. In addition to the participant still being in the employment of the group at the time of unconditional granting, the performance criteria are based on the extent to which targets relating to financial results are met. Based on the financial results realised a matrix applies to each performance year that can result in a maximum of 140% times and a minimum of zero times the norm number of shares being granted conditionally. For 2013 the matrix indicated underlying EBITA as a percentage of the gross margin (conversion ratio) of between 11.3% and 16.5% (2012: between 13.4% and 23.6%) and underlying EBITA as a percentage of revenue of between 2.4% and 3.6% (2012: between 2.8% and 5.2%). For 2011 the matrix indicated a revenue range from 3.3 billion to 3.9 billion and an underlying EBITA margin of 3.4% to 5.2%. Additional non-financial performance targets were agreed for key management which could result in a maximum of 30.0% of the norm number of shares being granted conditionally in each performance year. As a result the maximum factor applicable to key management is 170.0% of the norm number of shares. In determining the costs of this share plan the 2013 performance criteria take into account a factor of 63.0% (2012: 28.0%) for the financial performance criteria and a factor of 20.0% for the non-financial performance criteria (2012: 27.3% to 28.5%) for key management. A factor of 63.0% (2012: 28.0%) is taken into account for other personnel based on the financial criteria. A factor of 100.0% has been taken into account for 2014 for both key management and other personnel. The wage tax of key management is payable by the group, which will be recognised as a transaction settled in cash. The gross value of the shares conditionally granted each year is set at a maximum of the fixed remuneration for both key management and other personnel. The average share price in the course of the respective performance year applies in the calculation of this gross value. In 2013 another 5,000 shares were conditionally granted to key management and 11,500 shares to other personnel. The fair value has been determined based on a Monte Carlo model to express the valuation of the maximum amount conditionally granted. The method bases expected volatility on the historic volatility for a period equal to the remaining term of the share plan and the risk-free interest is based on the zero coupon on government bonds applying to a period equal to the remaining term of the share plan.

139 The movements and parameters were as follows: 2013 KEY-MANAGEMENT OTHER SETTLED IN SHARES SETTLED IN CASH SETTLED IN SHARES Number of participants 2 67 Balance as at 1 January 305, ,506 Conditionally granted 17,000 26,005 Expired during the year -195, ,304 Balance as at 31 December 126, ,207 Fair value Average share price for the determination of fair value Dividend yield 3% - 5% 2% 2% - 6% Volatility 47% - 49% 30% 44% - 49% Risk-free interest rate 0.8% - 2.3% 0.1% 0.2% - 2.2% The number of shares stated in the table is based on performance factors achieved in 2011, 2012 and 2013 and the maximum performance factors for The expiry of conditionally granted shares relates to the termination of employment of participants and an adjustment of the performance factor for 2013 from 170.0% to an average 83.0% for key management and from 140.0% to 63.0% for other employees. In determining fair value while taking into account a grossing up of the settlement due to the wage tax to be paid by USG People, the intrinsic value of sharebased payments settled in cash is equal to the share price. In 2012 the movement and the parameters were as follows: 2012 KEY MANAGEMENT OTHER SETTLED IN SHARES SETTLED IN CASH SETTLED IN SHARES Number of participants 5 92 Balance as at 1 January 375, ,450 Conditionally granted 12,750 70,980 Expired during the year -82, ,924 Balance as at 31 December 305, ,506 Fair value Average share price for the determination of fair value , Dividend yield 3% - 7% 5% 3% - 6% Volatility 47% - 52% 43% 44% - 49% Risk-free interest rate 0.8% - 2.3% 0.0% 0.2% - 2.2% CONSOLIDATED FINANCIAL STATEMENTS 137

140 The number of shares stated in the table is based on performance factors achieved in 2011 and 2012 and the maximum performance factors for 2013 and The expiry of conditionally granted shares relates to an adjustment of the performance factor for 2012 from 170.0% to an average 55.7% for key management. For other employees the expiry of conditionally granted shares relates to the termination of employment of participants and an adjustment of the performance factor from 140.0% to 28.0%. In determining fair value while taking into account a grossing up of the settlement due to the wage tax to be paid by USG People, the intrinsic value of share-based payments settled in cash is equal to the share price. Additional share plan In 2012 an additional share plan was launched for a number of employees at a newly acquired operating company. All grantings under this share plan were withdrawn in July 2013 and immediately replaced by new grantings effective 1 April The shares conditionally granted under the withdrawn plan (15,000) have been expired. The previous grantings represented a total charge of 91 when they were withdrawn. This charge continues to be recognised for the original vesting period. The replacement grantings represent an expected total charge of 152. The additional 61 charge on the replacement grantings compared to the withdrawn grantings is recognised for the vesting period of the replacement rights. This charge will be adjusted to reflect actual performance. The number of shares conditionally granted under the new plan is 30,000. The unconditional granting of half of the shares will take place in May 2014, with the other half of the shares being unconditionally granted in May In addition to the participant still being in the employment of the group at the time of unconditional granting, the performance criteria are based on the extent to which EBITDA targets for 2013 and 2014 are met by the respective operating company. The fair value is determined using the Black-Scholes model, with expected volatility being based on historic volatility over a period equal to the remaining term of the share plan and the risk-free interest rate being based on the zero coupon interest rate on government bonds applying to the remaining term of the share plan. The movements and the parameters were as follows: SETTLED IN SHARES Number of participants 6 6 Balance as at 1 January - - Conditionally granted 15,000 15,000 Expired during the year -15,000 - Balance as at 31 December - 15,000 Fair value Average share price for the determination of fair value Dividend yield 3% 3% Volatility 28% 43% Risk-free interest rate 0.1% 0.2%

141 USG People SAR plan The USG People SAR plan covers the period from April 2008 up to April The only performance criterion for unconditional settlement after three years is that the participant is still employed by the group at the time of settlement. The USG People SAR plan is granted to the management that is not entitled to take part in the Unique Share Plan. Settlement will take place in cash and will equate to the difference between the share price in April 2008 ( 14.83), April 2009 ( 6.73) and April 2010 ( 13.95), respectively, and the share price at the moment of unconditional settlement. Settlement after three years will be postponed by six months if the distributable amount for each SAR is less than 1. If after this six-month period the distributable amount is still less than 1, settlement will once again be postponed for six months. If the distributable amount is still less than 1 after this period, no settlement will take place. Unconditional settlement could have taken place in the spring of 2011 (being three years after having been granted in 2008), and in the spring of 2012 (being three years after having been granted in 2009) but the distributable amount was less than 1 and settlement was therefore postponed in accordance with the above terms and conditions. On the latter postponed date the share price was still insufficient and the rights granted expired. The third unconditional settlement could have taken place in the spring of 2013 (being three years after having been granted in 2010) but the distributable amount was less than 1 and settlement was therefore postponed in accordance with the above terms and conditions until April The fair value has been determined based on a Monte Carlo model, which provides a simulation of the market condition applied to the SAR plan. The method bases expected volatility on the historic volatility for a period equal to the remaining term of the SAR and the risk-free interest rate is based on the zero coupon interest rate on government bonds applying to a period equal to the remaining term of the SAR. The movements were as follows: GRANTED IN 2009, EXPIRING IN Number of participants Exercise share price 6,73 6,73 Outstanding at 1 January 99, ,660 Expired -99,125-30,535 Outstanding at end of financial year - 99,125 Parameters: Fair value at end of financial year Intrinsic value Share price used to determine fair value Risk-free interest rate - 0.0% Volatility - 27% Dividend yield - 2% CONSOLIDATED FINANCIAL STATEMENTS 139

142 GRANTED IN 2010, EXPIRING IN Number of participants Exercise share price Outstanding at 1 January 117, ,199 Expired -33,850-34,631 Outstanding at end of financial year 83, ,568 Parameters: Fair value at end of financial year Intrinsic value Share price used to determine fair value Risk-free interest rate 0.1% 0.0% Volatility 37% 49% Dividend yield 0% 3% USG People SAR plan The USG People SAR plan came into effect in The terms and conditions and valuation of this plan are identical to those of the SAR plan The settlement in cash will be the difference between the share price in May 2011 ( 12.32), May 2012 ( 6.58) and May 2013 ( 5.91), respectively, and the share price at the moment of unconditional settlement. The movements were as follows: GRANTED IN 2011, EXPIRING IN Number of participants Exercise share price Outstanding at 1 January 147, ,660 Expired -43,570-34,740 Outstanding at end of financial year 104, ,920 Parameters: Fair value at end of financial year Intrinsic value Share price used to determine fair value Risk-free interest rate 0.1% 0.0% Volatility 30% 43% Dividend yield 1% 4%

143 GRANTED IN 2012, EXPIRING IN Number of participants Exercise share price Outstanding at 1 January 180,570 - Conditionally granted - 190,430 Expired -55,200-9,860 Outstanding at end of financial year 125, ,570 Parameters: Fair value at end of financial year Intrinsic value Share price used to determine fair value Risk-free interest rate 0.3% 0.2% Volatility 44% 43% Dividend yield 2% 5% GRANTED IN 2013, EXPIRING IN Number of participants 299 Exercise share price 5.91 Outstanding at 1 January - Conditionally granted 161,870 Expired -16,530 Outstanding at end of financial year 145,340 Parameters: Fair value at end of financial year 4.16 Intrinsic value 3.78 Share price used to determine fair value 9.69 Risk-free interest rate 0.6% Volatility 40% Dividend yield 2% CONSOLIDATED FINANCIAL STATEMENTS 141

144 29. RELATED PARTIES Remuneration of key management Key management consists of the members of the Executive Board and the Supervisory Board Salaries and other short-term remuneration 3,501 2,555 Pensions Severance pay 2,844 - Share based payments Remuneration of Supervisory Board ,130 3,911 No loans or guarantees have been issued to the members of the Executive Board and Supervisory Board Remuneration of the Executive Board The remuneration of the members of the Executive Board recognised in the income statement is as follows: FIXED REMUNERATION PENSION CONTRIBUTION VARIABLE SHORT- TERM CASH REMUNERATION VARIABLE LONG- TERM SHARE REMUNERATION 1 ) SEVERANCE PAY 3 ) TOTAL CRISIS LEVY²) ROB ZANDBERGEN , , LEEN GEIRNAERDT , ERIC DE JONG ,230 1, HUBERT VANHOE ALBERT JAN JONGSMA , ) Including shares granted under the Unique Share Plan and the Unique Share Plan , recognised in accordance with IFRS 2. 2) Under the so-called crisis levy as set out in article 32bd of the Dutch Wages and Salaries Tax Act of 1964 an amount of 230 (2012: 234) was recognised as personnel costs for Executive Board members in The amounts for individual Executive Board members vary depending on the applicable tax conditions. 3) Under the so-called charge on excessive severance pay as set out in article 32bb of the Dutch Wages and Salaries Tax Act of 1964 an amount of 15 for Albert Jan Jongsma was recognised as personnel expenses.

145 The variable long-term share remuneration is shown for the full year and can be broken down as follows: Unique Share Plan CONDITIONALLY GRANTED BASED ON NORM NUMBERS FACTOR FOR COST CALCULATION UNCONDITIONALLY GRANTED IN 2011 ADDITIONAL SHARES TO BE GRANTED IF RETAINED FROM CHARGE IN 2013 INCOME STATEMENT CHARGE IN 2012 INCOME STATEMENT ROB ZANDBERGEN , % 6,000 1, , % , % 24,500 6, ,500 30,500 7, LEEN GEIRNAERDT % % , % 2, ,650 2, ERIC DE JONG , % 2, ,000 0,0% , % 14,000 3, ,000 16,000 4, HUBERT VANHOE % % , % 2, ,200 2, ALBERT JAN JONGSMA , % 1, , % , % 10,500 2, ,500 11,700 2, CONSOLIDATED FINANCIAL STATEMENTS 143

146 Unique Share Plan CONDITIONALLY GRANTED BASED ON NORM NUMBERS FACTOR FOR COST CALCULATION CONDITIONAL NUMBER BASED ON PERFORMANCE IN FINANCIAL YEAR AND ESTIMATE FOR COMING YEAR 1 CHARGE IN 2013 INCOME STATEMENT CHARGE IN 2012 INCOME STATEMENT ROB ZANDBERGEN , % 6, , % 12, , % 18, , % 22, ,000 60, LEEN GEIRNAERDT , % 3, , % 8, , % 12, , % 15, ,500 39, ERIC DE JONG , , , , , HUBERT VANHOE , , , , ALBERT JAN JONGSMA , , , , , ) This number is based on the actual performance in 2011, 2012 and 2013 and assumed performance in 2014.

147 29.3. Remuneration of the Supervisory Board The remuneration of the Supervisory Board is as follows: Cees Veerman Christian Dumolin - 27 Joost van Heyningen Nanninga Rinse de Jong Marike van Lier Lels Alex Mulder The term of Joost van Heyningen Nanninga ended in May The term of Christian Dumolin ended in May No option rights are granted to members of the Supervisory Board and no operating assets are made available to them Other In 2013 a few transactions took place between USG People N.V. and its large shareholder. These transactions relate to the provision of goods and services worth 400 and took place at standard market conditions. 30. COMMITMENTS Third-party property lease commitments relating to property, cars and other assets totalled around million at the end of 2013 (2012: million). The decline is mainly the result of the divestment of subsidiaries. A breakdown of these commitments according to maturity is as follows: On 12 February 2013 the Dutch district court in Arnhem ruled in favour of USG People N.V. s appeal to an excessive supplementary assessment imposed by the Dutch Tax Authorities. The retrospective assessment is based on the Dutch legislation regarding assessments of excessive severance payouts and was related to the departure of a former director. Both parties have appealed the ruling with the Supreme Court of the Netherlands. The ruling is expected in The dispute concerns an amount of 500. In 2011 USG People in Germany filed lawsuits against former directors for reasons including a breach of a non-competition clause. The ruling is expected to be favourable and lead to a substantial compensation for USG People. The time required to complete the civil lawsuit is currently unknown. The estimated damage as a result of the aforementioned lawsuits amounts to 21,000. The ultimate amount of possible claims is not yet known Less than one year 39,987 53,705 Between one to five years 56,182 98,787 More than five years 7,641 12, , ,214 The group leases offices under an operating lease construction. The maturity of these contracts ranges from three to twelve years, with an option to extend at the end of the period. In line with the share purchase agreement the buyer of USG Energy can hold USG People responsible for the fact that USG Energy s pension plan may need to be adapted to the scheme of the Stichting Pensioenfonds voor Personeelsdiensten. USG People believes there is no reason to change the pension plan, but talks between USG People and the respective organisation have not been completed yet. USG People has been informed by the buyer of the General Staffing activities about a 5,400 claim from a supplier of Start People S.A. in Italy relating to alleged breach of contract. The notificiation is part of the share purchase agreement resulting from the divestment of the activities. The time needed for arbitration proceedings is not known yet. 31. CONTINGENT ASSETS AND LIABILITIES Due to the nature of the group s activities, bank guarantees for a total amount of 83,647 (2012: 116,919) have been issued. The decrease is mainly the result of the divestment of subsidiaries. In France, social security authority URSSAF imposed an assessment on our operating company Start People SAS in 2011 in connection with a social security investigation. The assessment is based on the assumption that taxes and CONSOLIDATED FINANCIAL STATEMENTS 145

148 social security contributions owed on the salaries of temporary employees were calculated incorrectly. The assessment concerns the years 2009 and 2010 and amounts to 16,922. The interest on the tax due was deemed to be 1,650 at the end of USG People lodged an appeal against the URSSAF assessment with the Commission de Recours Amiable at the end of February This appeal was dismissed on 21 June USG People subsequently lodged an appeal with the Tribunal des affaires de sécurité sociale at the end of July USG People believes that the payments were in accordance with the law. Based on this information it is assumed that no liability exists and no provision has been recognised. The appeal will be dealt with on 4 June EVENTS AFTER BALANCE SHEET DATE No events of any material interest to the group as a whole took place after the balance sheet date. 33. PRINCIPAL SUBSIDIARIES AND ASSOCIATES OF USG PEOPLE N.V. COMPANY STAKE OWNED CITY, COUNTRY Call-IT Antwerp, Belgium Express Medical Antwerp, Belgium Receptel Antwerp, Belgium Secretary Plus Management Support Antwerp, Belgium Start People Antwerp, Belgium Unique Antwerp, Belgium USG Engineering Professionals Antwerp, Belgium USG People Interservices Antwerp, Belgium Technicum Merkers-Kieselbach, Germany Secretary Plus Munich, Germany Unique Munich, Germany Secretary Plus Management Support Saint-Julien-lès-Metz, France Start People Saint-Julien-lès-Metz, France USG Professionals Paris, France ASA Student Almere, The Netherlands Call-IT Weert, The Netherlands USG Finance Professionals Utrecht, The Netherlands Creyf s Interim Den Bosch, The Netherlands Secretary Plus Management Support The Hague, The Netherlands Start People Almere, The Netherlands Technicum Almere, The Netherlands Unique The Netherlands Almere, The Netherlands USG Marketing, Communication & Sales Professionals Almere, The Netherlands USG Engineering Professionals Almere, The Netherlands USG Legal Professionals Utrecht, The Netherlands USG Restart Utrecht, The Netherlands

149 CONSOLIDATED FINANCIAL STATEMENTS 147

150 COMPANY FINANCIAL STATEMENTS COMPANY INCOME STATEMENT amounts in thousands of euros RESTATED* Income of subsidiaries after taxes -4, ,063 Income of USG People N.V. after taxes -21,284-23,116 NET INCOME -26, ,179 * The changes to IAS 19 Employee benefits resulted in a restatement of the 2012 figures. COMPANY BALANCE SHEET AT 31 DECEMBER (BEFORE PROFIT APPROPRIATION) note: amounts in thousands of euros RESTATED* NON-CURRENT ASSETS 2 Intangible assets Property, plant and equipment Subsidiaries 924, ,672 5 Other financial fixed assets 2,524 22,463 6 Deferred income tax assets 8,585 7,794 Financial fixed assets 935, , , ,287 CURRENT ASSETS 7 Other current receivables 12,531 6,929 Current income tax receivables 6,701 10,113 Current receivables 19,232 17,042 Cash and cash equivalents 6 6 TOTAL ASSETS 955, ,335 8 EQUITY Paid-up and called-up capital 40,242 39,858 Share premium 366, ,532 Revaluation reserve 1,258 1,258 Currency translation reserve Other reserves 76, ,940 Net income for the financial year -26, , , ,924 9 Provisions 1, Non-current liabilities 211, , Current liabilities 283, ,787 TOTAL LIABILITIES 955, ,335 * The changes to IAS 19 Employee benefits have resulted in a restatement to the 2012 figures.

151 NOTES TO THE COMPANY INCOME STATEMENT AND BALANCE SHEET statements. The company presents a condensed version of the income statement in accordance with article 402 Part 9 Book 2 of the Dutch Civil Code. 1. ACCOUNTING PRINCIPLES FOR PREPARING THE COMPANY FINANCIAL STATEMENTS The company financial statements of USG People N.V. are prepared in accordance with the legal regulations of Part 9, Book 2 of the Dutch Civil Code. In this context the group makes use of the option provided under article 362 section 8 Book 2 of the Dutch Civil Code to apply the same principles of valuation and determination of results in the company financial statements (including the principles for presenting financial instruments as equity or liabilities) as those applied in the consolidated financial Participating interests in subsidiaries and other associates over which USG People N.V. is able to exercise dominant control or which it manages centrally are presented according to the equity method as set out by the Dutch Accounting Standards Board. Change in accounting policy IAS 19 Employee benefits changed as from 1 January Please refer to note 2 of the consolidated financial statements for an explanation of the change and its impact. 2. INTANGIBLE ASSETS Acquisition price 4,190 3,846 Cumulative amortisation and impairment -3,548-3,283 Carrying amount as at 1 January Investments during the year Amortisation during the year Carrying amount as at 31 December Breakdown of carrying amount Acquisition price 4,526 4,190 Cumulative amortisation and impairment -3,876-3,548 CARRYING AMOUNT AS AT 31 DECEMBER COMPANY FINANCIAL STATEMENTS 149

152 3. PROPERTY, PLANT AND EQUIPMENT Acquisition price Cumulative depreciation and impairment Carrying amount as at 1 January Investments during the year Divestments during the year Depreciation during the year Carrying amount as at 31 December Breakdown of carrying amount Acquisition price Cumulative depreciation and impairment CARRYING AMOUNT AS AT 31 DECEMBER SUBSIDIARIES RESTATED Balance as at 1 January 924,672 1,074,303 Acquisition of subsidiaries 4,711 12,062 Capital contribution to subsidiaries 93,992 17,000 Result from subsidiaries -4, ,063 Remeasurement of pension liability in subsidiary 203-1,182 Adjustment of additional liability from acquisition of subsidiary Dividend received -94,507-9,364 Currency translation differences BALANCE AS AT 31 DECEMBER 924, ,672 The acquisition of subsidiaries relates to the purchase of Adver- Online B.V. in 2013 and the purchase of Control Finance B.V. in 2012 (see note 5 of the consolidated financial statements). The capital contribution to subsidiaries relates to an increase in the capital of subsidiaries. The adjustment of the additional liability in 2012 relates to an adjustment of a contingent consideration.

153 5. OTHER FINANCIAL FIXED ASSETS Receivables from group companies 2,000 22,200 Other ,524 22,463 The movement of receivables from group companies is as follows: Balance as at 1 January 22,200 52,768 Loan repayment -9,500-30,568 Reclassification to short term -10,700 - Balance as at 31 December 2,000 22, DEFERRED INCOME TAX ASSETS The deferred income tax assets mainly relate to recoverable losses. 7. OTHER CURRENT RECEIVABLES Receivables from group companies 11,840 6,476 Other receivables ,531 6,929 COMPANY FINANCIAL STATEMENTS 151

154 8. EQUITY Paid-up and called-up capital The authorised capital at both 31 December 2013 and 31 December 2012 stood at 100 million, consisting of 200,000,000 ordinary shares with a nominal value of 0.50 each. PAID-UP AND CALLED-UP CAPITAL SHARE PREMIUM RESERVE REVALUATION RESERVE RESERVE FOR TRANSLATION DIFFERENCES OTHER RESERVES RESULT FOR THE YEAR TOTAL Balance as at 1 January , ,166 1, ,619-40, ,253 Restatement under IAS , ,610 Balance as at 1 January 2012 restated 39, ,166 1, ,009-40, ,643 Net income , ,179 Remeasurement of pension liabilities , ,182 Change to share plan Stock dividend Dividend for , ,334 Income deducted from other reserves ,159 40,159 - Currency translation differences BALANCE AS AT 31 DECEMBER 2012 RESTATED 39, ,532 1, , , ,924 Balance as at 1 January , ,532 1, , , ,924 Net income ,058-26,058 Remeasurement of pension liabilities Change to share plan Cash flow hedge Stock dividend Dividend for , ,976 Income deducted from other reserves , ,179 - Currency translation differences BALANCE AS AT 31 DECEMBER , ,148 1, ,774-26, , PROVISIONS Deferred income tax liabilities Personnel-related provisions , Personnel-related provisions relate to long-service awards, continuation of wage payments during extended periods of illness, restructurings and wage tax on share-based remuneration payable by the company.

155 10. NON-CURRENT LIABILITIES Value of non-current interest-bearing borrowings and liabilities 371, ,062 Current portion of non-current borrowings -159,728-63, , ,821 The non-current liabilities are categorised based on maturity as follows: TOTAL < 1 YEAR 1-2 YEARS 2-5 YEARS Syndicated revolving credit facility 149, ,042 Subordinated credit facility 58, ,118 Derivative financial instruments Group company loans 164, ,728 4, , ,728 4, , CURRENT LIABILITIES Current portion of non-current borrowings 159,728 63,241 Trade and other payables 6,306 4,204 Debts to group companies 117,902 81,114 Interest rate derivatives - 6, , , EMPLOYEES At the end of 2013 USG People N.V. employed 41 people (2012: 50), all in the Netherlands. 13. LIABILITY The company and many of its Dutch operating companies together form a fiscal unity for income tax purposes. Each of the operating companies is jointly and severally liable for income tax payable by all companies belonging to the fiscal unity. 14. AUDIT FEES The fees of PricewaterhouseCoopers Accountants N.V. and its affiliates in the countries where the group is active are specified as follows for the financial years: Audit of the financial statements 1,360 1,625 Other audit activities Other non-audit services ,410 1,847 The above fees relate to activities performed for the company and consolidated operating companies by accountant organisations and independent external auditors, as referred to in Art. 1, sub 1 of the Dutch Act on the supervision of audit firms (Wta), and the fees charged by the entire network to which the accountant organisation belongs. An amount of 697 of the 1,410 (2012: 835 of 1,847) was charged by PricewaterhouseCoopers Accountants N.V. COMPANY FINANCIAL STATEMENTS 153

156 15. REMUNERATION OF THE EXECUTIVE BOARD AND SUPERVISORY BOARD Please refer to note 29 of the consolidated financial statements for information about the remuneration of the Executive Board and Supervisory Board. This information is deemed to have been included and repeated here through this referral. Almere, 26 February 2014 Supervisory Board Cees Veerman (chairman) Rinse de Jong Marike van Lier Lels Alex Mulder Executive Board Rob Zandbergen (CEO) Leen Geirnaerdt (CFO)

157 COMPANY FINANCIAL STATEMENTS 155

158 OTHER DATA EVENTS AFTER THE BALANCE SHEET DATE No events of interest to the group as a whole took place after the balance sheet date. PROVISIONS IN THE ARTICLES OF ASSOCIATION REGARDING PROFIT APPROPRIATION ARTICLE 29. PROFIT AND DISTRIBUTIONS 29.1 Profit distributions can only be made to the extent the company s equity exceeds the amount of the paid-up and calledup part of the capital plus the reserves that are to be maintained pursuant to the law or these Articles of Association The first distribution on the preference shares to be made from the profit as shown in the profit and loss account for the most recently ended financial year shall be, where possible, the percentage referred to below of the amount that was mandatorily paid on those shares. The percentage referred to above shall be equal to the average of the base refinancing rate of the European Central Bank weighted according to the number of days this interest rate applied during the financial year or part of the financial year for which the distribution is made, plus an allowance set by the Executive Board and approved by the Supervisory Board in the amount of at least one and a half (1.5) percentage points and with a maximum of four (4) percentage points, depending on the situation at such time. If, in the financial year in which the distribution referred to above is made, the amount mandatorily paid up on the Preference Shares is reduced or, pursuant to a resolution for an additional payment, is increased, the distribution shall be reduced or, if possible, raised, respectively, by an amount equal to said percentage of the amount of the reduction or increase, respectively, calculated as from the time the additional payment became mandatory If and to the extent that the profit is insufficient to make the distribution referred to in Article 29.2 above, the deficit shall be distributed and charged to the reserves, to the extent this does not involve any actions contrary to the provisions of article If and to the extent such a distribution cannot be charged to the reserves, such a distribution shall first be made to the holders of preference shares from the profits earned in subsequent years that the deficit is fully cleared, before the provisions of the next paragraphs of this article 29 can be applied If the profit of a financial year is determined and one or more preference shares were redeemed in that financial year, the parties that were holders of preference shares as shown in the register of holders of preference shares referred to in article 5.2 at the time of said redemption shall have an inalienable right to profit distribution as described below. The profit that is distributed to said holder(s) if possible shall be equal to the amount of the distribution, to which he would be entitled pursuant to the right determined above in this article 29, if he had been a holder of the preference shares referred to above at the time the profit was determined, to be calculated timeproportionately for the period that he was a holder of these preference shares in said financial year, which distribution shall be reduced by the amount of the distribution that was made in accordance with the provisions of article If, in the course of any financial year, preference shares were issued, the dividend on the relevant preference shares for that financial year shall be reduced proportionately until the relevant day of issue No distributions shall be made on the preference shares other than as provided for in this article 29 and in article Subject to the approval of the Supervisory Board, the Executive Board shall determine what part of the profit remaining after application of the provisions of the preceding paragraphs of this article 29 is to be reserved The remaining profit shall be at the disposal of the General Meeting of Shareholders Provided that an interim statement of assets and liabilities signed by the Executive Board evidences that the requirement referred to in article 29.1 concerning the capital position has been satisfied, the Executive Board may make one or more interim distributions to the holders of ordinary shares and/or the holders of preference shares with the approval of the Supervisory Board, with due observance, however, of the maximum referred to in articles 29.2, 29.3 and Subject to the approval of the Supervisory Board, the Executive Board is authorised to determine that a distribution on ordinary shares will not be made in cash but in the form of ordinary shares, or to determine that holders of ordinary shares may choose to accept the distribution in cash and/or in the form of ordinary shares, all this from the profit and/or from a reserve and all this to the extent the Executive Board has been designated by the General Meeting in accordance with articles 7.1 and 7.3. Subject to the approval of the Supervisory Board, the Executive Board shall set the conditions under which such a choice may be made.

159 29.10 In the event that preference shares are redeemed, a distribution shall be made on the cancelled preference shares on the day of redemption, which distribution shall be calculated as much as possible in accordance with the provisions of articles 29.2, 29.3 and 29.4, on the period for which no distribution referred to in article 29.2, first sentence, has yet been made until the day of redemption, all this provided that the requirement in article 29.1 has been satisfied, which must be evidenced by an (interim) statement of assets and liabilities drawn up in accordance with the provisions prescribed by law. ARTICLE 30. RELEASE FOR PAYMENT. ENTITLEMENT 30.1 Dividends and other distributions shall be made payable within four weeks after adoption, unless the General Meeting determines another date at the proposal of the Executive Board. Different payment release dates may be designated for the ordinary shares and the preference shares A deficit may only be offset against the reserves prescribed by law to the extent this is permitted by law. PROFIT APPROPRIATION The Executive Board proposes to distribute a dividend of 0.14 per ordinary share, payable either in cash or in shares. Based on 80,483,677 shares this amounts to a total dividend distribution of 11,268. The difference between the net income of - 26,058 and the proposed dividend distribution, being 37,326, will be charged to the other reserves. OTHER DATA 157

160 INDEPENDENT AUDITOR S REPORT To the general meeting of USG People N.V. REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS OUR OPINION In our opinion, the consolidated financial statements give a true and fair view of the financial position of USG People N.V. (the Company ) and its subsidiaries (the Group ) as at 31 December 2013 and of their result and cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code, and the Company financial statements give a true and fair view of the financial position of USG People N.V. as at 31 December 2013, and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch Civil Code. WHAT WE HAVE AUDITED We have audited the accompanying financial statements 2013 of USG People N.V., Almere. These financial statements consist of the consolidated financial statements and the Company financial statements. The consolidated financial statements comprise the consolidated balance sheet as at 31 December 2013, the consolidated profit and loss account, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended and the notes, comprising a summary of significant accounting policies and other explanatory information. The Company financial statements comprise the Company balance sheet as at 31 December 2013, the Company profit and loss for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information. THE BASIS FOR OUR OPINION We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the section Our Responsibilities for the audit of financial statements. We are independent of the Company within the meaning of the relevant Dutch ethical requirements as included in the Verordening op de gedrags- en beroepsregels accountants (VGBA) and the Verordening inzake de onafhankelijkheid van accountants bij assuranceopdrachten (ViO) and have fulfilled our other responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Materiality We set certain thresholds for materiality to determine the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the financial statements as a whole. For the purposes of determining whether the financial statements are free from material misstatement we defined materiality as the magnitude of misstatement that makes it probable that the economic decisions of a reasonably knowledgeable person, relying on the financial statements, would either change or be influenced. Based on our professional judgement, we determined materiality for the audit of the consolidated financial statements as 1.9 million, based on operating income adjusted for amortization and impairment of acquisition-related intangible assets and the net result of divestments. We also considered qualitative criteria and materiality levels for particular transactions, balances or disclosures in the financial statements. Overview of the scope of our audit Given our responsibility for the direction, supervision and performance of the group audit, we determined the type of work that needed to be performed at components and identified those components which, in our view, required a full scope audit of their financial information, either due to their size or their risk characteristics together with specific risk based procedures. We performed a full scope audit on the significant components in the Netherlands, Belgium, France and Germany. For those components PwC Netherlands and the PwC offices abroad performed an audit based on our instructions. Based on this, together with additional procedures performed at the Group level,

161 we believe we have obtained sufficient appropriate evidence regarding the financial information of the Group to express an opinion on the Group financial statements as a whole. THE KEY AUDIT MATTERS FROM OUR AUDIT Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements. Key audit matters are selected from the matters communicated with the Executive Board and the Supervisory Board, but are not intended to represent all matters that were discussed with them. Our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole. Our opinion on the financial statements is not modified with respect to any of the key audit matters described below, and we do not express an opinion on these individual matters. SALE OF USG ENERGY AND GENERAL STAFFING ACTIVITIES IN 6 COUNTRIES As described in note 5 of the financial statements USG People N.V. sold USG Energy and its subsidiaries in March 2013 and also sold subsidiaries which belong to the General Staffing activities in Spain, Italy, Austria, Switzerland, Poland and Luxembourg in June These transactions have a material impact on the result in the financial statements The sale of the General Staffing activities is recognised as discontinued operations and the comparable figures 2012 are adjusted accordingly. The sale of USG Energy does not classify as a discontinued operation. Our audit procedures included, among others, verifying the accuracy of the date of deconsolidation, the cut-off of balance sheet items and results at the date of deconsolidation, the classification as discontinued operation and the accurate and complete recognition of the transaction and the book result of the sale. In this respect we reconciled the sales price with underlying sales agreements and reviewed the adequate disclosure in the financial statements. VALUATION OF GOODWILL Goodwill is one of the most significant items on the balance sheet of USG People N.V. The annual goodwill impairment test was significant to our audit because the impairment test is based on estimates of management which included assumptions concerning the expected future cash flows. Those assumptions included, among others, the expected future sales, development of the margins and expected future development of markets and economic conditions. Based on the impairment test, the Executive Board concluded that no impairment is necessary. The most significant assumptions and the sensitivity analysis are disclosed in note 14 of the financial statements. Our audit procedures included, among others, verifying the reliability of the calculations and the WACC. We used our valuation experts to assist us. We also considered in our audit procedures the underlying evidence upon which management s assumptions were based as well as the adequacy of the disclosures of the assumptions and sensitivity analysis in note 14 of the financial statements. VALUATION OF DEFERRED TAX ASSETS The Executive Board prepared an assessment of the recoverability of the deferred tax assets based on the forecast of the results, taking into account the local fiscal law and regulations. The value of the deferred tax assets on the balance sheet are based on this assessment. This area was significant to our audit because of the magnitude of the deferred tax assets and the related complexity and subjectivity of the assessment process, which is based on assumptions that are affected by expected future market or economic conditions. We established that the forecast used for the coming years correspond to the forecast in the goodwill impairment test. In addition to this we performed, among others, work on the reliability of the calculated tax losses carried forward, the time to settle those losses in the various jurisdictions and the completeness of the disclosures in the financial statements. CLAIMS AND LEGAL CASES USG People N.V. accounted for claims from third parties as disclosed in note 24 and 31 of the consolidated financial statements. For those claims, provisions are recognised or contingent liabilities have been disclosed. The claims are important for our audit given the materiality of the claims and the assessment made by the Executive Board regarding its legal position. The Executive Board used external lawyers for this assessment. We validated the estimates of the Executive Board, among others, with correspondence between the legal counter parties, minutes of meetings and external lawyers letters. When necessary we used our specialists to assist us. OTHER DATA 159

162 OUR FINDINGS WITH RESPECT TO GOING CONCERN The financial statements have been prepared using the going concern basis of accounting. The use of this basis of accounting is appropriate unless the Executive Board either intends to liquidate USG People N.V. or to cease operations, or has no realistic alternative but to do so. As part of our audit of the financial statements, we concur with the Executive Board use of the going concern basis of accounting in the preparation of the financial statements. The Executive Board has not identified a material uncertainty that may cast significant doubt on USG People N.V. s ability to continue as a going concern, and accordingly none is disclosed in the financial statements. Based on our audit of the financial statements, we also have not identified such a material uncertainty. However, neither the Executive Board nor the auditor can guarantee USG People N.V. s ability to continue as a going concern. RESPONSIBILITIES OF THE EXECUTIVE BOARD AND THE SUPERVISORY BOARD FOR THE FINANCIAL STATEMENTS The Executive Board is responsible for the preparation and fair presentation of these financial statements in accordance with EU-IFRS and with Part 9 of Book 2 of the Dutch Civil Code and for the preparation of the report of the Executive Board in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore the Executive Board is responsible for such internal control as the Executive Board determines is necessary to enable the preparation of financial statements that are free of material misstatement, whether due to fraud or error. The Supervisory Board is responsible for overseeing the Company s financial reporting process. OUR RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS The objectives of our audit are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Dutch Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Dutch Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the planning and performance of the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Executive Board. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the Company and business activities within the Group to express an opinion on the (consolidated) financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We are required to communicate with the Executive Board and the Supervisory Board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

163 We are also required to provide to the Executive Board and the Supervisory Board with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. REPORT ON THE REPORT OF THE EXECUTIVE BOARD AND THE OTHER INFORMATION Pursuant to the legal- requirements under Part 9 of Book 2 of the Dutch Civil Code with respect to our responsibilities to report on the report of the Executive Board and the other information: We have no deficiencies to report as a result of our examination whether the report of the Executive Board, to the extent we can assess, has been prepared in accordance with Part 9 of Book 2 of the Dutch Civil Code, and whether the other information has been annexed as required by Part 9 of Book 2 of this Code; and We report that the report of Executive Board, to the extent we can assess, is consistent with the financial statements. Amsterdam, 26 February 2014 PricewaterhouseCoopers Accountants N.V. Original signed by P.J. van Mierlo RA OTHER DATA 161

164 TEN-YEAR OVERVIEW 2012 amounts in thousands of euros unless otherwise stated 2013 RESTATED 1) 2011 CONSOLIDATED INCOME STATEMENT Revenue 2,270,031 2,441,954 3,244,772 Percentage growth compared to previous period -7.0% -24.7% 4.7% Operating income 41, ,206-4,386 Percentage growth compared to previous period 137.5% % % As a percentage of net revenue 1.8% -4.5% -0.1% Net income -26, ,179-40,159 Percentage growth compared to previous period 86.4% % % As a percentage of net revenue -1.1% -7.8% -1.2% Operating cash flow 26,186 29, ,609 Dividend 11,268 9,566 13,336 Dividend / net income -43.2% -5.0% -33.2% CONSOLIDATED BALANCE SHEET Non-current assets 843, ,993 1,127,701 Current assets - current liabilities -124, , , , , ,256 Shareholders' equity 458, , ,253 Non-controlling interests 1, Non-current liabilities 259, , , , , ,256 OTHER KEY FIGURES Shareholders' equity / total equity plus liabilities 38.5% 36.4% 42.0% Current assets / current liabilities Number of shares as at 31 December (nominal value 0.50) 80,483,677 79,715,875 78,448,505 PER SHARE (NOMINAL VALUE 0.50) IN EUROS Net income 2) Operating cash flow 2) Dividend Shareholders' equity ) The divestment of the General Staffing activities and changes to IAS 19 'Employee benefits' resulted in a restatement of the 2012 figures 2) Based on average number of shares outstanding

165 ,098,630 3,001,134 4,024,965 3,887,681 3,536,836 1,977,609 1,300, % -25.4% 3.5% 9.9% 78.8% 52.1% 0.2% 43, , , ,206 64,185 36, % -99.3% -52.2% 25.6% 202.6% 74.1% -6.7% 1.4% 0.0% 2.9% 6.3% 5.5% 3.2% 2.8% 15,293-30,965 16, , ,853 21,077 24, % % -87.9% 26.3% 425.9% -12.9% 63.7% 0.5% -1.0% 0.4% 3.6% 3.1% 1.1% 1.9% 105, , , , , ,974 46,927 12,432-37,688 51,581 45,445 12,593 9, % % 36.8% 41.0% 59.7% 37.5% 1,148,359 1,172,434 1,200,115 1,086,958 1,066,482 1,099, , , ,920 26, ,030-2,729-32,989 44,009 1,010,387 1,033,514 1,226,836 1,193,988 1,063,753 1,066, , , , , , , , , ,402 1,028 1,129 2, , , , , , , ,721 1,010,387 1,033,514 1,226,836 1,193,988 1,063,753 1,066, , % 38.9% 34.0% 34.9% 30.2% 22.9% 36.2% ,702,427 70,682,433 70,633,400 63,679,719 63,117,700 62,969,532 45,376, ADDITIONAL INFORMATION 163

166 FINANCIAL GLOSSARY DIVIDEND That part of net income paid out to shareholders. DSO (DAYS SALES OUTSTANDING) Measure of the age of trade receivables, expressed as the average number of days that receivables are outstanding. EBITA Operating income before amortisation and impairment of acquisition-related intangible assets EBITA MARGIN EBITA as a percentage of revenue. EBITDA Operating income before depreciation, amortisation and impairment of acquisition-related intangible fixed assets. FINANCIAL DERIVATIVES Financial instruments to cover financial risks. The value is derived from the development of the underlying value such as interest or foreign currency. GROSS MARGIN Gross profit as a percentage of revenue. GROSS PROFIT Revenue minus cost of sales. NET FINANCIAL DEBT Interest bearing debt minus cash and cash equivalents. NET INCOME Result attributable to shareholders. OPERATING CASH FLOW Cash flow from operating activities including tax. OPERATING EXPENSES Selling, general and administrative expenses and other income and expenses. OPERATING INCOME Income before finance costs and income taxes.

167 COLOPHON USG PEOPLE N.V. P.O. Box AA Almere P.J. Oudweg CK Almere The Netherlands +31 (0) [email protected] DESIGN & REALISATION most remarkable bv PRINT Drukkerij Snep B.V. PHOTOGRAPHY Hans-Peter van Velthoven FINAL EDITING USG People N.V. Corporate Communication & Investor Relations ADDITIONAL INFORMATION 165

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169 2013 ANNUAL REPORT The USG People 2013 annual report is printed on 300 and 135 grams Heaven 42 (FSC certified).