2019 annual report - headfirst group

2019 Annual report

Contents 2/ / HeadFirst Group 2019 Annual report

You are about to come along on a journey through our organization, results and stra-tegy. We have already packed your suitcase ready for you. The same suitcase symbolises the national and international journey that we make as an organization, with our employees and clients. This suitcase also represents the unique combination of servi-ces that enable us to offer a solution for every hiring need. We invite you to join us.

Are you ready to go?


Revenue rankings 2020(Source: Flexmarkt Top 100 Revenue ranking list 2020)

Position in 2019 (2018) Focus

2019 Revenue x € million (2018)

1 (1) ¡ Randstad Groep NLq3,330.0 (3,460.0)

2 (3) ¥ HeadFirst Groupp1,010.5 (893.1)

3 (2) ¡ USG People NLq975.0 (1.071.7)

4 (4) ¥ Brainnet Groepp864.0 (757.0)

5 (5) ¡ Timingp727.0 (715.6)

6 (9) ¥ House of HRp574.5 (474.0)

7 (6) ¡ ManpowerGroup NLq558.5 (707.0)

8 (8) ¥ Harvey Nashp535.2 (483.1)

9 (7) ¡ Adecco Group NLq525.8 (611.4)

10 (10) ¡ YoungCapitalp515.0 (464.0)

¡ Organizations with (main) focus on temporary work¥ Organizations with focus on MSP and intermediary services

Countries where professionals work via HeadFirst GroupNetherlandsBelgiumLuxembourgGermany

DenmarkSwedenFinlandEstonia

SwitzerlandItalyPoland

146Number of employees

(at year-end)

10,750Professionals working

for our clients (at year-end)

>5.500Suppliers of professionals

15.4 Operational

EBITDAx € million

29.4Gross margin

(revenue result) x € million

>51,000Independent professionals

1,010Gross invoice value(revenue) x € million

370Clients

served in 2019

Countries with a HeadFirst officeCountries without a HeadFirst office


Contents

Foreword by the Board of Directors 5

About usProfile 6Key figures 2019 9History 10

Management reportMarket developments and trends 13Strategy 17Explanatory notes to the 2019 financial results 21

Organization 22Outlook for 2020 24Risks and uncertainties 27Governance 30

2019 Financial statements 2019 Consolidated financial statements 342019 Consolidated statement of comprehensive income 34Consolidated balance sheet as at 31 December 2019 35Consolidated statement of changes in equity 36Consolidated statement of cash flows for 2019 37Notes to the consolidated financial statements as at 31 December 2019 38

2019 Company financial statements 71Company balance sheet as at 31 December 2019 712019 Company income statement 72Notes to the company financial statements 2019 73

Other information Articles of Association provisions governing profit appropriation 79Proposed profit appropriation 79Independent auditor’s report 80

Supplementary information 83


Foreword by the Board of Directors

2019: a superb result

We like to describe the year as a remarkable achievement. Autonomous growth of 13% was achieved in a year that was spent in part on the operational integration of working methods and locations in Utrecht, Rotterdam as well as Hoofddorp and the migration of the various IT systems after two acquisitions in 2018. The official figures are much higher, since the 2018 acquisitions – Staffing Management Services and Myler/Jenrick – have been recognised in the consolidated financial statements for the full year in 2019 for the first time. The gross margin rose considerably by 40.9% to € 29.4 million (2018: € 20.8 million). Annual revenue (gross invoice value) rose by 62.5% to € 1.01 billion (2018: € 621.4 million). The operational EBITDA amounts to € 15.4 million and therefore meets expectations.

In other words, we have exceeded an annual revenue of € 1 billion for the first time in the company’s history. When you consider that we achieved this figure with the same number of employees as in 2018, you can understand why we describe it as a remarkable achievement. This result rightly marks HeadFirst Group as the market leader in the Netherlands in the field of hiring external professionals. We are also the proud second-largest player in the Benelux flexible labour market, among the major temporary employment companies.

2020: opportunities in the age of the coronavirus

Suddenly, the coronavirus happened and we were all taken by surprise. The virus, and the associated economic consequen-ces, have clearly had an impact on the flexible labour market as well as our organization. Fortunately, we are able to adapt our costs and budgets to market developments. Because we are enterprising, we are also focusing on the opportunities. As during previous crises, we are making countercyclical invest-ments, which we are currently doing with our IT infrastructure. For example, we are making the transition from HR service provider to platform company. The coronavirus crisis is also underpinning a number of trends that have been apparent for some time: the need for organizational flexibility (responding to market developments), control over the hiring of personnel (rapid upscaling and downscaling) and automation (location- specific work has proven vulnerable). The shortage in the market for highly skilled knowledge workers is also expected to continue, emphasising the need for the solutions that we offer. In short, there are plenty of opportunities.

Ambitions

All of the above means that we have major ambitions. We want to make the transition from HR service provider to

platform company, based on self-service and scalability. This transition requires a change in culture and a huge impact on our employees, which will take a number of years. At the same time, we are keen on continuing to develop autonomously in combination with our M&A strategy, even in this year of the coronavirus. We want to grow at an international level with Belgium as the top priority, while Germany as well as Scandi-navia are also important countries and regions. All of the above will help us to achieve our strategic objective of being a permanent leading player in the Western European flexible labour market.

Coming along?

Are you ready for the journey? We have made this tour as captivating and engaging as possible to give you a rapid as well as complete overview of the world in which we operate and what it will look like tomorrow. While we take you along through our 2019, we also look forward to 2020 and the years to come. After all, although it is good to look back, thinking about the road ahead is even better.

Hoofddorp, 30 July 2020Board of DirectorsHeadFirst Group

‘‘ We would like to take you on a journey through our organization, results and strategy. ’’


About us Profile

HeadFirst Group is the market leader in the Benelux in the field of the professional organization of external hiring. We offer a wide range of flexible solutions including matchmaking, contracting, payrolling and global sourcing, while we also act as a Managed Service Provider (MSP). Every day, more than 10,000 professionals work via HeadFirst Group for clients within the government, financial services, transport, industry, utility and various other sectors.

HeadFirst Group has been connecting independent professionals, suppliers and clients since 1995. Independent professionals and suppliers offer their expertise to clients through us. Clients then hire in all the available knowledge through us from this independent knowledge network. Our guiding principle is: the right person at the right time in the right place for the right period. In a labour market that is becoming more and more flexible, we are the link between independent professionals, suppliers and clients. We enable professionals to excel at their work and allow clients to access their expertise without worries.

Vision

Labour market flexibility is increasing so quickly that work as we knew it has changed entirely within ten years. The links are less clear where more flexible work is done. It is precisely there that HeadFirst Group makes a significant

contribution.

Mission

We link the demand for and supply of flexible expertise

in such a way that it becomes so much more together.

Our services and our brands

HeadFirst Group includes the companies HeadFirst, Jenrick, Myler, Source and Staffing Management Services. Thanks to a unique combination of organizations, each with its own specialist services, HeadFirst Group has a solution for every hiring need. We like to think of it as a suitcase full of services.

For clients

Business consultancy Based on decades of practical experience in the flexible labour market, our experts advise clients on strategic

HR policy and the role of external hiring. The outcome is a well-founded hiring policy.

Managed Service Providing As an extension of the HR or Purchasing department, our sister company Staffing Management Services takes

care of the hiring process for clients in part or in full. Moreover, we fully optimise it.

Matchmaking* Under the HeadFirst brand, we provide access to the entire flexible labour market and we enable clients to

choose from the very best professionals. Once a successful match is made, we deal with all the administration.

Contracting* For clients who prefer to carry out their own recruitment and selection of professionals, but who want the

peace of mind that their hiring activities are free from risks, we are here to help. We manage the contracts, take care of accounting and financial administration, and exclude hiring risks. While we enter into contracts with independent professionals, suppliers and employment agencies, we can also provide payrolling services.

Global Sourcing Our Myler team seeks out and selects the best specialists abroad. We then organise their stay in the

Netherlands to ensure that clients can easily access their expertise.

Vendor Management System Select is our hiring platform developed in-house which brings demand and supply closer together than ever

before. Clients can easily manage their own temporary workforce with our innovative, white-label software. Select can be easily integrated into client processes and matches all the different VMS systems.

* The Jenrick, Myler and Source brands, which have become part of HeadFirst Group in recent years through acquisitions, are also active in this area; however, the HeadFirst brand has primary positioning for this service.

Contents 7/ / HeadFirst Group 2019 Annual report / About us

For independent professionals and suppliers We want entrepreneurs to excel without having to worry about practical matters. As well as the possibility to secure challenging assignments through us, we therefore offer independent professionals and suppliers the option to take advantage of unique additional services. These services cover all aspects of business practice, including administration, insurance, debtor management and personal development.

Business owners can choose from three levels of service: Basic, Premium or Excellent. This service is based on no cure, no pay. The corresponding rate per hour worked is applied only once a professional starts working through us. Independent professionals and suppliers can use the services if they secure an assignment through us, or if they obtain an assignment through their own network with one of our clients and contractually transfer it to us.

‘‘ We want entrepreneurs to excel without having to worry about practical matters.

’’

Contents 8/ / HeadFirst Group 2019 Annual report About us/

29.42019

20.82018

* HeadFirst only included in revenue.

** As from 2017, Source is consolidated.

*** In 2018, Staffing MS and Myler are partly consolidated.

**** As from 2019, Staffing MS and Myler are fully consolidated.

498.92017**

191.72016*

1,010.52019****

621.5 2018***

1462019

1472018

3702019

3292018

13,6462019

12,2972018

42,9152019

34,6182018

17,1822019

13,4402018

Gross invoice value (revenue)Gross revenue result

Number of employees

Assignments received

Offers received

Professionals employed via HeadFirst Group

Clients served(numbers)

(x € million)

Key figures 2019

Contents 9/ / HeadFirst Group 2019 Annual report /

Contents 10/ /

History

1995

Many organizations hire external staff and yet have

little overview, let alone control of the costs and hiring

risks. Rick Kruiswijk knows the world of external hiring

from both sides, which allows him to make sizeable savings.HeadFirst is established, with

ING as its first client.

2011

HeadFirst launches HeadFirst Select, the first online

platform for temporary capacity. This platform allows

clients to find the best professional for an

assignment quickly and efficiently, without the

associated administrative burden.

2017

HeadFirst merges with sector partner Source, becoming part of the listed HeadFirst

Source Group N.V. From this point onwards, we take on a leading market position in

organising the hiring of external professionals:

matchmaking, contracting and payrolling.

2018

HeadFirst acquires sector partner Myler and managed

service provider StaffingManagement Services.

Together, we can offer clients even more solutions,

includingMSP services and global

sourcing. The organization leaves the stock market and

joins together with all the other brands under HeadFirst

Group.

2020

Over ten thousand professionals work for more than two hundred clients in the Benelux every day. We

generate an annual revenue in excess of € 1 billion,

making us a top 3 player in the total flexible labour

market.

HeadFirst Group 2019 Annual report


‘‘I aim to get the best

out of a partnership. Proper communication, trust and

information about processes are key priorities.

’’–Nikita EickerMSP resource consultant

As an MSP resource consultant, Nikita Eicker is responsible for client contact with municipalities and suppliers, in which she primarily has a consulting and service-oriented role. ‘HeadFirst Group helps to create the best match for professionals and clients.

My main job is to set out the assignments, which involves providing guidance and advice to the managers doing the hiring’, Nikita explained. ‘The advice encompasses more than just the assignments themselves. We look closely at developments in the market, laws and regulations, as well as whether the request complies with the public procurement directives.’

‘Hiring managers are sometimes looking for a needle in a hays-tack. In that case it’s important for us to look at the possibilities together. We are always guided by the client’s wishes.’

According to Nikita, client contact is what makes her job so enjoyable: ‘My advisory role and the direct contact that I have with the client offer a lot of variety within my position. You are an important link between the two parties.’ She also closely involves suppliers in the tendering process. ‘To do so, we organise workshops and I carry out site visits. This personal attention generates trust.’

Close cooperation is also important to Nikita in terms of colleagues, which is evident within her team and HeadFirst Group: ‘As I am a real family person, I feel so at home within the organization. We help and support each other. I know what my colleagues can do for me and I can make good use of their expertise. In addition, I get a lot of freedom in my work. I essentially do everything in consultation with the client and we often advise one another within my team. We can talk to each other about anything and have complete trust in one another.’

What colleagues say/

Management report



Coronavirus crisis

After a thriving economy in recent years, we have unexpectedly come up against the coronavirus crisis in 2020. The economy within the eurozone is expected to shrink by around 9% this year. According to basic projections made by CPB Netherlands Bureau for Economic Policy Analysis, the estimated contraction in the Netherlands is 6%. A critical point to note is that further contact-limiting measures later in 2020, about which there is a great deal of uncertainty, could cause yet more damage to the economy.

The coronavirus crisis is affecting the labour market, including the flexible labour market in which HeadFirst Group operates. We are faced with a decline in the number of hiring requests and hours worked. However, only a very limited number of professionals have had their assignments terminated. At the time of producing this annual report, the coronavirus has generally had a limited impact on our organization. We will look at the consequences of the coronavirus crisis for our organization later in this report.

Shortage of professionals continues

Demand is falling, supply is increasing. According to the basic laws of economics, this fact should mean a decrease in scarcity. However, many labour market specialists predict that this situation will not be the case for highly skilled knowledge workers: the shortage of professionals is set to continue. This prediction is supported by recent figures from Jobdigger, Intelligence Group and the Employee Insurance Agency UWV: since the intelligent lockdown in March 2020, the number of vacancies in the Netherlands has fallen by around a quarter. The reduction in new vacancies is the greatest for medium-skilled workers (around 28%). For academics, the reduction in labour market demand is approximately 16%. Current labour market data also show that graduates of senior secondary vocational education are more likely than those with higher qualifications to anticipate a reduction in assignments and income over the next twelve months.

ABN AMRO goes so far as to note that there has been hardly any reduction in the labour market shortage since the coronavirus crisis began. Despite the larger supply of workers, around 11% of open vacancies are still difficult to fill, as the travel distance and/or professional interests of job seekers are not compatible with the available jobs. According to the indicator, the labour market shortage is therefore around the same level as in January 2020.

Market developments and trends

‘‘ Labour market shortage in the segment of highly skilled knowledge workers is set to continue, despite of COVID-19.

’’

https://intelligence-group.nl/nl/nieuws/arbeidsmarktvraag-krimpt-met-een-kwart-laatste-weken-licht-hersteld

https://www.uwv.nl/overuwv/pers/nieuwsberichten/2020/aantal-vacatures-sinds-corona-met-kwart-gedaald.aspx

https://www.zipconomy.nl/2020/05/arbeidsmarktvraag-krimpt-met-een-kwart-laatste-weken-licht-hersteld

https://www.zipconomy.nl/2020/05/arbeidsmarktvraag-krimpt-met-een-kwart-laatste-weken-licht-hersteld

https://www.zipconomy.nl/2020/06/krapte-op-arbeidsmarkt-ondanks-coronacrisis-nauwelijks-afgenomen/


Increasing labour market flexibility

The labour market is becoming more flexible, according to the needs of both organizations (demand side) and workers (supply side). The permanent position is on the wane because people want to decide where, when and how they work. Recent figures from Statistics Netherlands show that there are around 1.5 million independent professionals in our country. They have steadily risen in numbers over recent years, in almost all branches of industry. Currently, around 12% of all workers in the Netherlands are freelance. The majority of these independent professionals have consciously chosen this type of work in search of freedom and autonomy.

Historically, a crisis tends to bring with it a greater desire for stability among workers. Only time will tell whether this fact is also true for this exceptional crisis, the cause of which bears no relation to economics. There are no signs of this tendency for the time being. On the contrary, the Chamber of Commerce statistics show that tens of thousands of freelancers set up a business in the early months of the coronavirus crisis.

For large organizations, temporarily hiring expertise, innovativeness and brainpower is an integral part of strategic HR policy. There is a great need for the costs of staff to be taken into account with the projects as well as the activity level of the organization, the market and the economy. The coronavirus crisis has further reinforced this need. Another thing that has been reinforced is the positive image that organizations have of flexible home working. Based on the above facts and findings, we predict that increasing flexibility on both the demand side and the supply side of the labour market will continue to reinforce each other in the near future.

Unrest about labour market legislation

The current legal system in the Netherlands is not set up for the modern flexible labour market, in which entrepreneurship and hybrid forms of working are becoming increasingly important. Employment relationships are characterised on the basis of legal frameworks from a hundred years ago. The Dutch government is faced with the challenge of modernising employment law. In the meantime, legislation is being introduced to combat negative effects such as unfair competition on employment terms in the Balanced Labour Market Act (Wet Arbeidsmarkt in Balans, WAB) and pseudo self-employment in the Assessment of Employment Relationships (Deregulation) Act (Wet deregulering beoordeling arbeidsrelaties, Wet DBA). There has been much discussion for many years now, particularly in relation to the Assessment of Employment Relationships (Deregulation) Act.

In the flexible labour market, ‘modern workers’ come up against a brick wall of legal frameworks. The latest framework, set to be introduced as a pilot project in late 2020, is a web module that clients and contractors can use to assess their employment relationship. This solution does not appear to offer the clarity and certainty which the market so badly needs. A general election is scheduled to take place in the Netherlands for 2021. Depending on the government formed in the wake of these elections, we can expect a new chapter when it comes to labour market legislation. A structural solution is therefore still a long way off.

Technological developments

Technological developments have a major impact on our society, including on the labour market. Developments such as robotics, artificial intelligence and block chain cause significant job losses, but also create new jobs.

We distinguish three movements:

1. Automatable jobs are disappearing Robotisation and machine learning are on the rise. Digital systems will soon be able to process much larger amounts of data, recognise patterns and learn from experience data. Work that requires relatively little brainpower is expected to be taken over by artificial intelligence within ten years.

2. Complementary jobs are changing

The amount of work in which people and technology work together is growing. There are currently almost no jobs that are not technically supported and that development promises to take a big flight with the arrival of digital assistants, chat bots and the like.

3. New jobs are emerging It is difficult to predict exactly what kind of jobs arise, but trend watchers and futurologists agree that this movement is getting under way. What is certain is that digital skills become indispensable on the future labour market.

Market developments and trends/

https://www.cbs.nl/nl-nl/dossier/dossier-zzp/hoofdcategorieen/ontwikkelingen-zzp

https://www.cbs.nl/nl-nl/publicatie/2020/06/dynamiek-op-de-nederlandse-arbeidsmarkt-de-focus-op-zekerheid

https://www.zipconomy.nl/2020/06/kvk-ongeveer-een-derde-minder-startende-ondernemingen-de-cijfers-over-mei-al-weer-iets-hoger/

https://www.zipconomy.nl/2020/06/kvk-ongeveer-een-derde-minder-startende-ondernemingen-de-cijfers-over-mei-al-weer-iets-hoger/

Market developments and trends/15/ / HeadFirst Group 2019 Annual report

Opportunities for HeadFirst Group

Optimalhiring

Shortage

Business ProcurementHR

ComplianceAvoiding an authority

relationship withindependent professionals

Strategic staplanning

Continuityprojects

Control over hiring

Balance betweenpermanent & flexible

Recruitingprofessionals

Sta planning vsorganizational policy

Cost control

Forecast & benchmark

Stakeholders

Them

es

Client challenges to which HeadFirst Group offers solutions

Complexity of hiring calls for outside assistanceAs described above, there is a great deal of unrest about labour market legislation in the Netherlands. Acts such as the Assess-

ment of Employment Relationships (Deregulation) Act (2016), the GDPR (2018), the Balanced Labour Market Act (2020) and the Posted Workers in the European Union (Working Conditions) Act (2020) have made the hiring of external staff increasingly complex over the past few years. The wide array of regulations has prompted organizations to seek outside assistance in this area. This trend will likely continue in the coming years. HeadFirst Group meets this need with its contracting service.

Scarcity drives demand for our servicesThe trend set out above towards a continuing shortage of knowledge workers, despite the coronavirus crisis,

means that organizations have a continuing need for help in recruiting external personnel. HeadFirst Group has a solution to this problem with its triple sourcing model of � an open market approach, � close ties with a closed community and � global sourcing.

Need for control over hiring exposedOrganizations that have control over their external hiring know exactly who is hired where in the organization and why. It has proven that organizations which did not

have this insight at the outset of the coronavirus crisis are less able to take account of market developments. This situation has exposed the need for control over hiring, as a result of which we saw a growing demand for our business consultancy services in the first half of 2020. The result was some excellent new additions to our client list.

Consolidation in the intermediary and MSP marketHeadFirst Group is operating in a consolidating market. The coronavirus crisis is likely to have an intensifying

effect on this situation. We are continuing our growth and acquisition strategy as vigorously as before.

Organizations are accelerating automationThe coronavirus crisis has clearly, albeit painfully, illustrated the need for organizations to automate. Location-

specific work has been shown to be a risk factor. This realisation is expected to boost digitalisation within organizations, leading to a greater demand for online and IT specialists. HeadFirst Group has been strong in this area since its inception.

Contents


‘‘Before I came to work at HeadFirst, I was

not being challenged and I was missing out on personal

development. I am now learning every single day and

each process is a new challenge.

’’–Nicole Tjan

Bid manager

Nicole Tjan joined the HeadFirst Group bid management team in 2018. Between then and now, she has fully embraced the role: ‘In the time that I have worked at HeadFirst Group, I have learnt so much. .

My background in communication and project management meant that I’d already been involved in a number of tendering processes, but we take it one step further with bid management. We’re at the front of the organization and are the first point of contact for potential clients. We show what we can offer clients and how we can meet their needs. We’re always aiming for the highest attainable level of service and carefully consider every fine detail.’

‘During a tender process, everyone in the organization plays an important role in finding a good solution within the require-ments. As a result, there is a high level of engagement.’

As part of her role, Nicole has frequent contact with all departments within the organization. She views this engagement and cooperation as key to a good tender. ‘We need the organization in order to ensure the best service solution for the client. Everyone is happy to help each other and there is always plenty of interest in the developments surrounding a process. We have a strong winning mentality and really go for it as a team. If we have a positive result, we celebrate’, Nicole tells us.

Cooperation, growth opportunities and perseverance are terms inherent to HeadFirst Group as well as Nicole herself. ‘Perseverance is an essential quality in a bid manager. You learn something new every day, even if the outcome is not what you expected, and it’s never boring. The new partnership with Myler and Staffing MS is providing a lot of new insight within our department. As you are working together to achieve a good result, fresh ideas can be very useful.’



StrategyOur direction for the next three years

We are currently the largest player in the intermediary and MSP market within the Netherlands as well as a long-term top 3 player in the total flexible labour market. Nevertheless, we still have major ambitions when it comes to growth. In the rapidly changing labour market, we aim to become a permanent top player in the total flexible labour market within Western Europe in the next five years.

To achieve this goal, we have formulated six key goals for 2020:

1. Generating organic growth by making full use of our existing services with existing and new clients, which also means successfully combining the benefits of our different services;

2. Growing at an international level with Belgium, Germany as well as Scandinavia as important countries and regions alongside the Netherlands;

3. Continuing our merger and acquisition (M&A) strategy to support our strategic objective of being a permanent top player in the flexible labour market within Western Europe;

4. Further developing our Select online platform so it excels in terms of user-friendliness, offering data insight and smart services via artificial intelligence;

5. Investing in business development, paying special attention to the addition of new products and services to our Premium as well as Excellent range for suppliers and independent professionals;

6. Not allowing our focus on the total fulfilment of our clients’ need to detract from what we have believed in since the very beginning: ‘who has supply will attract demand’. We are continuing to invest heavily in our relationship with, and the added value that we offer to, independent professionals and suppliers.

For the next three years, we have the following strategic goals:

1. To transform our organization from an HR service provider to a platform company. The main focus here is on further developing our Select online platform into a scalable platform for the future, on which users – clients, suppliers and independent professionals – exchange value with one another on a self-service basis;

2. To continue diversifying our range of labour market services via our M&A strategy, making the transition to a Total Talent Management service provider;

3. As well as expanding abroad by collaborating with existing clients, to take steps as well to establish permanent HeadFirst Group offices in countries outside the Benelux, in which choosing the right locations will be key. Germany and Scandinavia are focus areas;

4. To take on and continue to fulfil an emphatically leading role when it comes to the transparency, development, modernisation as well as improved functioning of the flexible labour market, in which our public affairs strategy is key.

‘‘ We aim to become a permanent top player in the total flexible labour market within Western Europe in the next five years.

’’

Contents 18/ / HeadFirst Group 2019 Annual report Strategy

Development in 2019

We achieved organic growth of 13% in a year that was spent in part on the operational integration of working methods and locations in Utrecht, Rotterdam as well as Hoofddorp and the migration of the various IT systems after two acquisitions in 2018. We would like to describe it as an unprecedented achievement. As a result, we have exceeded an annual revenue of € 1 billion for the first time in the company’s history. This result rightly marks HeadFirst Group as the market leader in the Netherlands in the field of hiring external professionals.

Doing business togetherOur colleagues had an eventful year. Staff at the Myler and Jenrick companies, originally located in Utrecht, moved to the HeadFirst Group head office in Hoofddorp. Staffing Management Services relocated within Rotterdam from Heemraadsingel to a new site on the Meuse River (Oostmaaslaan). A number of staffing changes also took place to ensure that the right people were once again in the right place. While these decisions affected the organization, they rapidly provided clarity for the employees, which turns out to be the most valuable outcome – as we learned from the merger with Source in 2017.

The focus therefore returned relatively quickly to operational integration and exploiting group synergy gains. We would like to express our admiration for all our staff members who have achieved this goal together. It shows the entrepreneurial spirit that characterises our company, both internally and externally. The prevailing mindset was not one of ‘clinging on to what we have’ but rather ‘how can we start to exploit the new gains right now’. This attitude defines our organization. Developments for clientsWe have been extremely successful in exploiting our group synergy gains. Matchmaking, contracting, global sourcing, payrolling and MSP services are united in the group. Existing clients have made the step from one service to multiple services. For instance, our clients have discovered that our global sourcing service provides added value in the face of

long-term shortages. Clients have also progressed on our ‘hiring maturity ladder’: from intermediary to Managed Service Provider.

We have made the transition to ‘full service’ provider by developing ourselves as an advisor for our clients. We advise clients on various subjects, such as changing laws and regulations (recently, the Assessment of Employment Relationships (Deregulation) Act, the Balanced Labour Market Act and the Posted Workers in the European Union (Working Conditions) Act), and guide them in the design of hiring processes, benchmarking of rates as well as forecasting (planning) of external hiring. We continuously train our account managers and relationship managers to exercise this advisory role.

In 2019, we successfully made our knowledge available to clients on the basis of consultancy, for which Staffing Management Services has laid the foundations over the last few years. Several clients underwent a ‘hiring scan’ analysis, including a risk scan, process scan and benchmarking of rates. The clients were satisfied with this process, since it led to a long-term collaboration in most cases, such as in the case of a major chemical concern.

One synergy benefit that has proved to be important is our scope as HeadFirst Group, which makes us a larger, even more stable partner for national and international corporate clients. We were pleased to welcome a major pension provider as a new client, while we have also started to offer our services in Germany, Sweden and Poland at the request of existing clients.

‘‘ An organic growth of 13% in a year that was partly spent on operational integration is an unprecedented achievement, for which we admire all our staff members.

’’

/

Contents 19/ / HeadFirst Group 2019 Annual report Strategy

As well as adding for-profit organizations to our list of clients, we have been very successful in European tendering processes. The RDW (National Vehicle and Driving Licence Registration Authority), the Ministry of Infrastructure and Water Management, ICTU and the Custodial Institutions Agency remained clients. We also added the Ministry of Finance, the Ministry of General Affairs, RINUS Foundation, the University of Groningen, the Immigration and Naturalisation Service (IND), the Municipality of Arnhem and De Connectie as clients.

Developments for independent professionals and suppliersThe new clients that we welcomed are great news for the independent professionals and suppliers in our network. As the assignments for all our other clients, the assignments for these clients appear on our HeadFirst Select platform and/or on inhuurdesk.nl. We therefore make it possible for the very smallest companies to do business with the largest clients. This intermediary role lies at the heart of our services.

We made good progress within that context in 2019. All Myler and Jenrick assignments and clients have been combined in Select, creating the largest assignment platform in the Netherlands for direct access to ultimate clients without intermediaries. As well as assignments, contracts and time-recording were also migrated to Select. This fact means that contracts with all professionals are now concluded on the same platform in accordance with a uniform process, offering convenience for independent professionals and suppliers.

Since 2012, HeadFirst Group has provided an extensive range of services for the supply side of the market, including rapid payment of invoices, attending knowledge sessions, insurance, discounts on training and mobility products. In 2019, we also provided independent professionals and suppliers from the Myler and Jenrick network with access to these services. They were keen to take advantage of this option. Another reason for their popularity is that we overhauled this service provision at the start of 2019. We further expanded the content of our Premium range for

independent professionals with additions such as cyber security insurance and an invoice payment term of 25 days (instead of 30), accompanied by a price increase. We also added the Excellent service, which offers suppliers and independent professionals even shorter payment terms. Excellent is also linked to our new ‘replacement’ service, in which we offer additional attention and support to secure a new assignment for professionals who currently work through us. In this way, we continue to invest in initiatives that increase the added value of our services to independent professionals and suppliers, as we aim to do again in 2020.

DigitalisationWe made impressive progress in relation to digitalisation and IT in 2019, which we would like to mention briefly in the following bullet points:• Assignments, contracts and data for Myler and Jenrick

were migrated to HeadFirst Select.• The Myler system Workspace was phased out, but not

before the time-recording module was successfully converted into a module that was added to HeadFirst Select. This service further enhanced the added value of our platform for clients.

• We completely revamped our contracting process by largely digitalising it according to the straight-through processing (STP) principle. Since then, we have started using this new method to conclude contracts with all our clients.

• We migrated to Microsoft Office 365, followed by the roll-out of Teams and the switch to a SharePoint intranet at the start of 2020.

• In the area of business intelligence, a future-oriented data warehouse (DWH) was set up. Dashboards and reports were then built in PowerBI, providing our organization from top to bottom with unique insights based on our rich data. The DWH is a plug-and-play interface to new systems which we purchase or systems of organizations which we will acquire in the future, pursuant to our M&A strategy.

/


Jeroen van Mierlo is someone who has successfully made the career leap from support assistant to Development & IT manager. He has watched not only himself grow but also HeadFirst Group: ‘Both I and the organization have grown a massive amount. This growth is thanks to the culture at HeadFirst Group: some organizations prioritise political manoeuvring over good ideas, but strong ideas win every time with us!’

Jeroen started his career at HeadFirst in 2011 as a support assistant for the HeadFirst Select online platform. He was the first point of contact in supporting Independent Professionals within the system. Jeroen has now progressed to the role of manager and is responsible for Business Development & IT. ‘While my original background is actually in marketing, I have always had an interest in processes and IT. Within HeadFirst Group, I have had the scope to develop through the responsibilities that I was given and the training that I followed’, Jeroen explained.

‘The organization itself has been growing for years now and encourages its employees to think outside the box.’

Jeroen has now been involved in developing Select for the past seven years: ‘It is not just our clients but also the entire organization that uses the online platform, so I am often in contact with colleagues. The best thing about it is that we are constantly developing and improving processes together.’ The importance that Jeroen attaches to development is in line with the Agile methodology to which he adheres. ‘As supervisor and scrum master, I focus on the scrum approach within the team and the organization, which is helping us make substantial progress in terms of transparency and process improvements. I view my duty towards my team in the same light. As scrum master, I fulfil a number of roles: on the one hand as a facilitator and on the other hand as a coach, mentor and servant leader’, said Jeroen.

‘‘Our team’s role within the organization is to

create the most valuable software for users. To achieve

this aim, you need to develop together.

’’–Jeroen van MierloDevelopment & IT manager



Explanatory notes to the 2019 financial resultsIn the first year that all acquisitions from 2018 – Staffing Management Services and Myler/Jenrick – were recognised in the consolidated financial statements for the full year, the results achieved are very positive. The gross revenue result rose by 41.3% to € 29.4 million (2018: € 20.8 million). An annual revenue (gross invoice value) of € 1.01 billion was realised in 2019. This figure means an increase of the total revenue by 62.5% compared with 2018 (€ 621.4 million). The group has therefore passed the historic milestone of an annual revenue in excess of € 1 billion.

Thanks to the inclusion of Myler/Jenrick and Staffing Management Services in the consolidated financial statements for a full year, there has been a marked increase in both gross revenue result and operating expenses. The financing of this acquisition also led to higher interest expenses.

The year 2019 saw a further increase in equity to € 26.7 million (2018: € 23.8 million). In addition, solvency at the end of the financial year was 12.6% (2018: 11.4%), which is a good result in our market. The credit facility arranged in 2018 was replaced in 2020 by a new facility with a different financing party at lower costs, reducing pressure on the cash flow. We also won a number of tenders in 2019 and 2020, placing us in a positive position for the future. Combined with our positive outlook for the coming years, we are confident that this success will ensure the continuity of HeadFirst Group.

€ 29.4 mgross revenue result

2018: € 20.8 m

41.3%

€ 26.7 mequity

2018: € 23.8 m

12.2%

€ 1.01 bnannual revenue

2018: € 621.4 m

62.5%

12.6%solvency*

2018: 11.4%

10.5%

* Above average in the MSP and intermediary market.


HeadFirst Group as an employer

As an employer, HeadFirst Group has undergone rapid development in recent years. Involvement, fun and ownership are central to our organization. We encourage our employees to adopt an enterprising approach through personal development and by giving them responsibility. We have a naturally informal culture with short communication lines, but

on the other hand, professionalism resonates in everything that we do. We are a reliable employer, where ‘good employment practices’ prevail. We actively convey this employer branding to potential employees, with a focus on the ‘working at’ HeadFirst Group website introduced in 2019.

Diversity policy

The HeadFirst Group workforce is diverse in terms of age, origin, motivation and life experience. We have 95 employees in the under-40 age category and 59 employees in the 40-and-over age category. The average age is 38. Our workforce is

55.5% male and 44.5% female. We do not exclude anyone on any grounds. Every person is equal but also unique. We take these differences into account.

Since the portfolios have been divided between the existing board members after the merger and acquisitions in recent years, there has not been a direct opportunity to ensure a balanced male-to-female distribution of managerial positions. The importance of a balanced distribution will be taken into account when appointing or recommending future board members.

Organization

We let entrepreneurs run their business

We establish loyalty through generating enthusiasm, not through contracts. We are opposed to the use of non-competition and non-solicitation clauses. We help entrepreneurs to learn from one another through training, knowledge events and communities. We take on tasks for entrepreneurs, including clients, suppliers and independent professionals, leaving them free to concentrate on what they do best.

Our employees are entrepreneurs as well. We view continuing development as a necessity, not an option. We expect ownership and give freedom and responsibility in return. We want our employees to be critical, but in a positive way. We naturally give each next step careful thought, but we subsequently get things done!

We set the tone

People look to us, which is for good reason. We are an authority. We are progressive in terms of reliable solutions and are constantly setting the standard. What we basically do is to provide clients, independent professionals and suppliers with digital as well as physical access to one another. How we do so, however, is continuously developing. To achieve this goal, we are constantly looking to create added value for our clients. We listen, develop and feed back. Our professional maturity is evident in our perception of the market and proactive advice.

We may be large within our market, yet we remain a flat organization and do not place any one person above another. We have become large by staying small. We listen to our employees and think in terms of opportunities. We always want to offer these opportunities as well to young talent and experi-enced professionals with a young mindset who want to set the tone.

We win together

We do not achieve success alone. Working together on the ‘we-factor’ is key. When the organization performs well, it is thanks to the contribution of our employees. No success goes unnoticed and outstanding achievements are rewarded. We win, but we also develop together. We are inspired to become a little better every day. Mistakes can happen, from which we learn.

Clients also contribute towards our success and we show this contribution. We do not treat any client as just a number but as an associate to whom we devote personal attention. Moreover, our relationship can approach that of business friends. This relationship allows us to be honest with each other, which is better for us. As we develop, our clients develop along with us as well. This way, we win together.

What we stand and aim for

Contents 23/ / HeadFirst Group 2019 Annual report Organization

Corporate Social Responsibility

HeadFirst Group accepts its responsibility within society. Here, too, our core values of transparency, reliability and involvement are reflected. Corporate Social Responsibility (CSR) is therefore a fixed part of our business operations. We strive to ensure that good financial results go hand in hand with socially responsible business operations. We give substance to the three pillars of CSR – People, Planet and Profit – in line with our client portfolio as well as the demands that clients place on HeadFirst Group and its suppliers.

PeopleAt the end of the financial year, 146 employees were employed on the basis of an employment contract. We take targeted action to ensure that we are an attractive and inspiring employer for existing as well as future employees. Our vision is that when employees develop themselves, our organization automatically develops, too. We encourage development through our performance management programme, which gives employees control over their own development. There is plenty of scope for training sessions, courses and programmes, as well as through internal peer-to-peer support.

The HeadFirst Group workforce is diverse in terms of age, origin, motivation and life experience. We take these differences into account. We also aim for diversity in the mediation of professionals. Age, distance from the labour market, religion and origin do not play a role with us. Our priority is to get the right person in the right place for our client.

PlanetWe have to cherish our earth. In our business operations, we take the environment into account by avoiding working with paper as far as possible. If paper is required, we use FSC certified paper. We separate our waste wherever possible and encourage the use of environmentally friendly cleaning products. We also implement energy-saving measures at every site, from lighting to workstations, and we are in constant dialogue on improvements with building owners. When choosing company cars, preference is given to economical cars with low CO2 emissions.

ProfitWe show our commitment by contributing to social projects based on an idea that appeals to us. This contribution is not structurally linked to fixed activities. Every year, we make choices, inspired primarily by our employees. We wholeheartedly support social initiatives undertaken by staff and set aside an annual budget for such activities. Examples include a cycling team that we sponsored in 2019, which raised funds for the fight against cancer via Giro di KiKA. At the start of 2020, more than twenty staff members took part in a spinning marathon organised by our client the Directorate-General for Public Works and Water Management to raise money for Lazlo Wander, who has the rare bone disorder Gorham’s disease.

Quality policy

HeadFirst’s certifications include the following standards.

NEN 4400-1NEN 4400-1 is the certification of the Labour Standards Foundation for organizations that act as an intermediary for temporary personnel. The quality mark imposes requirements on the payment of taxes and social security contributions. The NEN 4400-1 quality mark also offers peace of mind that an organization only provides personnel who are allowed to work in the Netherlands.

ISO 9001ISO 9001 is the international standard for quality management. This quality mark assesses whether we are able to meet the requirements that our clients impose, including in relation to laws and regulations. The requirements also provide a basis for our quality management system.

ISO 14001ISO 14001 is a standard involved in environmental management. An environmental management system according to the ISO 14001 standard can be used to control and, where possible, reduce the environmental risks associated with a company’s business operations. The ISO 14001 and ISO 9001 standards have an identical set-up thanks to a High Level Structure (HLS).

/


Outlook for 2020Based on the trends, developments, opportunities and past lessons learned, we started 2020 with great enthusiasm and entrepreneurship. We had identified six key areas in which we had formula-ted objectives, as mentioned earlier in this report.

Coronavirus

Suddenly, the coronavirus happened. In March, every organization was forced to scrap their projections for 2020, since these projections had or would be positively or negatively influenced by the coronavirus.

We saw a rapid decline in the number of new hiring requests in March. While we have seen a cautious positive trend in requests since May, the numbers have not yet returned to pre-coronavirus levels. The pandemic has also affected the number of hours worked by the more than 10,000 professionals who work for clients through us. However, only a very limited number of professionals have had their assignments actually terminated. Overall, we can say that the impact on us has remained minor up to now.

There are a number of reasons for this situation. The type of professionals for whom we act as an intermediary, mostly highly skilled knowledge workers who often work on business-critical processes within organizations, can usually carry out their work for our clients remotely. We have a good, healthy distribution of clients in various sectors, including many government organizations that have continued to be stable employers of temporary staff. Moreover, we do not employ any professionals whom we place on secondment, which makes us flexible. As we are capable of adapting our costs and budgets to market developments, we have done so.

We are proud of how our organization is dealing with this exceptional situation. Investment in the digitalisation of systems and processes in recent years has paid off, through Select and Microsoft Office 365. On the first day after Prime Minister Mark Rutte’s announcement of the ‘intelligent lockdown’, we were fully up and running. There has been no interruption in the services that we provide to independent professionals, suppliers and clients. We have also witnessed exceptional team spirit among our employees. New initiatives to keep us all connected are arising spontaneously, such as online sports sessions and pub quizzes.

We have also responded rapidly by cancelling live events and immediately replacing them with online alternatives in the form of webinars. This measure allows us to keep sharing knowledge, particularly in these times. Sice the start of the coronavirus crisis, we organised webinars for clients on labour market developments and hiring policy during the coronavirus crisis. We also set up webinars for independent professionals and one for suppliers on a range of topics, including COVID-19 measures for entrepreneurs and cyber security. We have therefore been able to add value in the form of knowledge.

‘‘ Overall, we can say that the impact of COVID-19 on our organization has remained limited up to now.

’ ’

Contents 25/ / HeadFirst Group 2019 Annual report Outlook for 2020

Persistent pursuit of our goals

Although the coronavirus crisis will affect the progress of 2020, the year that we were set to have a large celebration to mark our twenty-fifth anniversary, we will not be discouraged from continuing full steam ahead in the pursuit of our goals.

To generate autonomous growth, we aim to use in full the wide range of flexible services that we have available to clients: our suitcase full of services. This aim has already led to positive commercial developments in the first half of 2020 and we are confident that our success will continue in the second half of the year. In the pursuit of our international growth ambitions, we focus on positive commercial developments in Belgium. We are also expanding in step with our clients and have already opened entities in Poland as well as Sweden in 2020. In the meantime, we are continuing our take-over strategy as vigorously as before, with an acquisition in the Netherlands and/or Belgium as the top priority.

With regard to the development of Select as a platform, we emphasise 1) the automation of daily management (minimising operations and maximising development), 2) security, 3) fine-tuning the straight-through processing contract process and exception-based dashboarding, 4) automatic matching of assignments and professionals, 5) user experience in completing the business profile for independent professionals and suppliers, and 6) the transition to a self-service platform focusing on the addition of client functionality (registration, self-service recruitment).

We have drawn up a road map in which we permanently add new products and services to our supplementary range (Premium/Excellent) for independent professionals and suppliers. In the first half of the year, we introduced a free mobility card for all professionals who work through us, in collaboration with our partner ZP Zaken. New innovations are currently under preparation. We are listening closely to our clients. In order to collect as much information as possible and at the same time take our organization’s learning ability to the next level, we are expanding the use of feedback tool Ratecard across all our brands in 2020.

Finally, we plan to take steps in 2020 towards a more mature lobbying strategy by taking on someone with a focus on public affairs and by entering into a collaboration with the employers’ organization ONL voor Ondernemers based in The Hague.

Financial objectives

Back in 2017, we set ourselves the financial objective of doubling our gross invoice value (revenue) by 2020 at the latest, which we achieved in 2019 already. To fulfil our ambition of becoming a permanent top player in the total flexible labour market within Western Europe, we are now setting ourselves the same goal again: we want to double our current annual revenue of more than € 1 billion to € 2 billion euro by 2023. We aim to increase our operational result in step with this growth in revenue.

In 2020, the group will optimise its current funding structure, the effects of which are firstly a reduction in interest expense and secondly a further improvement in solvency as well as working capital position. We aim for a cost-to-income ratio of 40%, which is currently 50%.

In keeping with our digitalisation objectives for 2020 and our goal to transform our organization from an HR service provider to a platform company, we are investing heavily in IT. We also anticipate costs in connection with optimising the current funding structure as well as in relation to our merger and acquisition strategy.

/


‘‘Although I am still young,

it does not mean that I have no ideas about public affairs or

that I am straight out of the classroom. It means that I

offer a fresh approach.

’’–Sem OverduinPublic affairs officer

The idea of studying while at the same time applying the knowledge acquired in practice was something that appealed to Sem Overduin. Doing so is how he started his career at HeadFirst Group as public affairs officer. This concept was new to the organization, but not to Sem: ‘I came across this field several times during my studies and it caught my attention.

I’m very interested in the interaction between political stakeholders, socio-political changes and the way that policy is developed in the Netherlands. I really enjoy being involved in how this policy is subsequently translated to the corporate sector.’ Sem therefore views his role as an exciting challenge: ‘Public affairs means that I keep an eye on what is happening in politics and how we need to bear it in mind as an organization. The next step is for us to influence policy and decision-making processes. We also have to raise topics and issues with political as well as social stakeholders.’

‘HeadFirst Group is continuing to grow, which is why it is important to be part of the political conversation. Conversely, the government needs information from the market in order to develop policy.’

HeadFirst Group asked Sem to establish the foundations for the role of public affairs officer. ‘The organization’s public affairs activities are currently very limited’, said Sem. ‘My view is that it is important as a market leader to have a visible political presence and to take a position on themes that are relevant to the organization. Key decisions are made in The Hague. As an organization, you need to keep abreast of these developments so you can identify opportunities and threats in good time. It is also useful to have someone within the organization who understands how policy is developed and how government works. After all, these systems are becoming increasingly complex.’



Risks and uncertaintiesHeadFirst Group operates within an extremely dynamic environment. The key developments and circumstances that may affect the company’s results are shown below. The risk factors are not exhaustive and other factors, which are not currently known to the company or which the company currently regards as less important, can also affect the financial position of the company as well as the business or businesses to which it is affiliated.

‘‘ Identifying and eliminating risks is one of HeadFirst Group’s key critical success factors.

’ ’

Risk management, which identifies strategic, financial, operational and compliance risks, is an integral part of our business planning and review cycle. The management also performs a risk assessment to analyse the probability and impact of all relevant risks. The probability and impact assessments are used as a basis for determining risk appetite. Reasons to classify risks as unacceptable can be:• There is a threat to our continuity.• There is a threat to our reputation in the areas of

compliance and integrity.• There is a material impact on revenue and, specifically, on

profitability.

We have also stated an ambition, partly based on the scope for exerting influence and the developments for each risk. In doing so, we also looked at any opportunities presented by a risk, as a result of which it is not always desirable to mitigate the risk in full. The measures are designed to limit the risks as much as possible where required.

Contents 28/ / HeadFirst Group 2019 Annual report Risks and uncertainties

Risk Explanation Control measures

Strategic risks

Strategic risks can affect the feasibility of the strategic objectives. The main strategic risks are explained below.

Sensitivity to cyclical movements

Fluctuations in the economic cycle due to an unstable geopolitical situation, for instance, can have a direct impact on our performance. High market demand for specialist knowledge, particularly in the field of IT, has reduced the impact of this risk occurring.

We are committed to achieving growth in all our markets, with a focus on clients that are suited to our profile. In addition, we aspire to have more long-term contracts. Due to the focus on our key accounts, we consider a mild dependence to be acceptable.

Dependence on large clients

The scale of a number of clients in relation to total revenue can lead to overdependence on these clients. Our revenue has become less concentrated among a small number of large clients. The impact is therefore reduced.

We are committed to achieving growth in all our markets, with a focus on clients that are suited to our profile. In addition, we aspire to have more long-term contracts. Due to the focus on our key accounts, we consider a mild dependence to be acceptable.

Financial risks

Financial risks are risks relating to financing, the financial results, the financial stability of partners in the chain and tax risks. The main financial risks are discussed below.

Liquidity risk The critical stance among lenders is limiting the available financing options on the market.

We aim to reduce our average net debt further by intensively monitoring our working capital and achieving long-term reductions in our cost structure. We continue to monitor our working capital closely and continuously, while we also implement optimisation measures to improve our liquidity further where possible.

Credit risk Market conditions mean that clients, suppliers or vulnerable groups can develop liquidity, solvency or continuity problems.

We produce periodic internal reports on payment behaviour and outstanding invoices to partners in the chain. The creditworthiness of partners is regularly reviewed, for which the accounts receivable portfolio is partly insured and credit limits are applied.

Amortisation of goodwill Market conditions and future projections could necessitate the amortising the goodwill of acquisitions.

We are committed to achieving growth in all our markets so as to improve returns. Costs are also closely monitored. In addition, we constantly strive to optimise our work processes in order to achieve efficiency gains. Another way we do so is by achieving economy of scale gains as a result of our acquisitions.

//

Contents 29/ / HeadFirst Group 2019 Annual report Risks and uncertainties

Risk Explanation Control measures

Operational risks

Operational risks are unexpected developments that can have a negative impact on internal processes, employees, clients and systems. The main operational risks are discussed below.

Increasing risk profile of client requirements

In more and more cases, clients are keen on transferring liability to a supplier. Combined with a growing claim culture, the result is that our services have a heightened risk profile.

Our work processes are largely standardised and automated, which ensures adequate management as well as generating support and commitment among all parties involved. Managing this liability is also a key element of the added value that we offer to clients. We are continually investing in knowledge of laws and regulations as well as controlling these risks within our work processes and documentation with our Select platform.

Shortage on the labour market

There is a shortage of highly skilled IT professionals. This fact is due on the one hand to a limited supply on the labour market and to the lower retention of skilled and experienced staff for a number of reasons on the other, including the current economic circumstances.

We are continuously working to provide access in our database to IT professionals and keep their details up to date. We do so by positioning ourselves as a reliable partner with a high quality and broad range of services. One example is our premium range.

Data security andlegislation

Data security is essential in today’s digital era. Cyber crime or IT system failure can cause confidential information to fall into the wrong hands.

We are constantly improving our security organization and spreading awareness. In addition, we implement measures to secure our information and our information systems. Parts of our services are also certified.

Compliance risks

Compliance risks include anything that can lead to reputational, legal, financial or other damage as a result of a failure to comply with the applicable laws and regulations. The main compliance risks are discussed below.

Failure to comply with laws and regulations

HeadFirst must ensure that its business operations comply with the laws and regulations on aspects such as working conditions, accounting, the Balanced Labour Market Act as well as the General Data Protection Regulation.

Compliance with laws and regulations is HeadFirst Group’s core business. A multidisciplinary approach has improved awareness of existing as well as changing laws and regulations with the associated risks. We devote a great deal of attention to awareness via regular knowledge sessions for all employees.

Risk of reputational damage

Negative coverage of HeadFirst or its industry peers in the press and through other channels can damage the company’s reputation.

We are continuously looking for ways to focus on our employees’ development, awareness and knowledge in this area. In addition, we aim to communicate transparently with all our stakeholders, including clients, suppliers, independent professionals and the press.

/

Composition of the Board of Directors

The Board of Directors – consisting of Gert-Jan Schellingerhout, Mike Korenvaar and Geo van der Wilk – manages HeadFirst Group.

Gert-Jan Schellingerhout (1974)Chief Executive Officer

From 2000, Gert-Jan Schellingerhout occupied a number of financial positions within HeadFirst before becoming Chief Financial Officer in 2010. In 2015, Schellingerhout succeeded HeadFirst founder Rick Kruiswijk as Chief Executive Officer. He has been CEO of HeadFirst Group since the merger of HeadFirst and Source in 2016. As well as being ultimately accountable for the organization, Schellingerhout’s more specific areas of responsibility are Recruitment, Relations and Contracting.

Mike Korenvaar (1965)Chief Financial Officer

Before Mike Korenvaar joined HeadFirst’s Board of Directors as CFO in 2015, he had already been familiar with the organization for fifteen years; first as an accountant, then as a consulting partner at BDO Accountants & Belastingadviseurs from 2011. Thanks to this extensive knowledge and experience, Korenvaar became responsible for Finance & Control, IT, Legal & Compliance and HR within HeadFirst Group as Chief Financial Officer (CFO) in 2016.

Geo van der Wilk (1969)Chief Commercial Officer

As Chief Commercial Officer (CCO), Geo van der Wilk has ultimate responsibility for HeadFirst Group’s commercial activities. Van der Wilk has been active in the IT and flexible labour market for over 25 years, at companies including Myler (acquired by HeadFirst Group in 2018), Logica (now CGI) and Fujitsu. As a result, Van der Wilk has broad knowledge and experience in the field of the flexible labour market as well as HR solutions.

CEO CFO CCO


Governance

Sta�ing MSHolding BV

HeadFirst Source Holding B.V.

Source PayrollServices B.V.

Oyster Coast B.V.

Source Payroll B.V.

SourceAutomation B.V.

Proud Services B.V.

Source AutomationLuxemburg SA

Proud ICT B.V.

Proud Payroll B.V.

HeadFirstHoudster-Maatschappij B.V.

HeadFirst B.V.

HeadFirst IT B.V.

Associates B.V.

DesignatedProfessionals B.V.

HeadFirst GroupBeheer B.V.

Proud Holding B.V.

Myler Holding B.V.

HeadFirstFinance 1 B.V.

Source+ NV

Myler IP B.V.

Myler B.V.

Jenrick PayrollServices B.V.

Jernrick Nederland B.V.

Sta�ing MSBroker B.V.

Sta�ing ManagementServices B.V.

Source InterimServices B.V.

Source AutomationBelgium BBVA

Sta�ing MSPayroll B.V.

Sta�ing MSBroker 2 B.V.

Sta�ing MSPayroll 2 B.V.

31/ / / Governance

Legal structure

HeadFirst Source Holding B.V. is the highest entity in the HeadFirst Group legal structure, which was as follows as at 31 December 2019:

HeadFirst Group 2019 Annual report /Contents


Financial statements


Contents 2019 Financial statements2019 Consolidated financial statements

2019 Consolidated statement of comprehensive income 34

Consolidated balance sheet as at 31 December 2019 35

Consolidated statement of changes in equity 36

Consolidated statement of cash flows for 2019 37

Notes to the consolidated financial statements as at 31 December 2019 381 Business combinations 492 Financial risk management 523 Net revenue 544 Employee benefits 555 Other operating costs 556 Financial income and expenses 567 Income taxes 568 Other comprehensive income 579 Profit appropriation and dividend 5710 Intangible assets 5711 Property, plant and equipment 5912 Financial assets 6013 Deferred tax assets 6114 Financial instruments 6115 Trade and other receivables 6216 Cash and cash equivalents 6317 Assets held for sale 6318 Equity 6319 Other liabilities 6320 Deferred tax liabilities 6421 Private loans 6422 Convertible loans 66

23 Amounts owed to credit institutions 6624 Current liabilities 6625 Collaterals 6726 Off-balance sheet rights and obligations 6727 Cash flow statement 6728 Related-party transactions 6829 Fair value 6930 Events after balance sheet date 70

2019 Company financial statements

Company balance sheet as at 31 December 2019 71

2019 Company income statement 72

Notes to the 2019 company financial statements 7331 Intangible assets 7432 Property, plant and equipment 7433 Financial assets 7534 Financial instruments 7635 Trade and other receivables 7736 Equity 7737 Current liabilities 7838 Employees 7839 Other operating costs 7840 Collaterals 78

Other information 79

Articles of Association provisions governing profit appropriation 79

Proposed profit appropriation 79

Independent auditor’s report 80


Comprehensive income

(x € 1,000) Note 2019 2018

Continuing operationsGross invoice value 3 1,010,480 621,461

Net revenue 3 295,534 177,365Cost of sales 3 266,163 156,517Gross margin result 29,371 20,848

Employee benefits 4 12,093 7,483Depreciation of property, plant and equipment 11 2,172 304Amortisation of intangible assets 10 2,690 2,635Other operating costs 5 3,619 4,502Total operating expenses 20,574 14,924

Operating result 8,797 5,924

Financial income 3,582 1,012Financial expenses (10,381) (5,980)Financial income and expenses 6 (6,799) (4,968)

Result before income tax 1,998 956Income tax 7 (636) (152)Result after income tax 1,362 804

Total comprehensive income 9 1,362 804

Other comprehensive income

(x € 1,000) Note 2019 2018

Comprehensive income 9 1,362 804Total other comprehensive income 8 - -

Total comprehensive income 1,362 804

2019 Consolidated statement of comprehensive income

The notes on pages 38 to 69 form part of these financial statements.


Assets

(x € 1,000) Note 31 December 2019 31 December 2019

Intangible assets 10 74,787 75,653Property, plant and equipment 11 3,329 1,053Financial assets 12 41,341 35,334Deferred tax assets 13 884 1,004Non-current assets 120,341 113,044

Trade receivables 14/15/29 9,876 23,683Subsidiaries 14/15/29 13,157 5,242Other receivables 14/15/29 38,792 36,665Cash and cash equivalents 14/16/29 28,790 28,706Current assets 90,615 94,296

Assets held for sale 17 - 1,050

Total Assets 210,956 208,390

Liabilities


Share capital 18 18 18Share premium reserve 18 6,592 6,500Loans qualifying as equity 18 17,432 16,437Other reserves 18 1,291 81Result for the year 18 1,362 804Equity 26,695 23,840

Other liabilities 19 1,437 -Deferred tax liabilities 20 2,204 2,655Private loans 21 8,583 8,076Amounts owed to credit institutions 23 - 601Non-current liabilities 12,224 11,332

Current portion of long-term loans 24 2,726 2,468Trade payables 24 95,816 102,481Tax and social security contributions 24 4,680 5,043Other current liabilities 24 68,815 63,226Current liabilities 172,037 173,218

Total Liabilities 210,956 208,390

Consolidated balance sheet as at 31 December 2019before profit appropriation



(x € 1,000) NoteIssued and

paid-up capitalShare premium

reserve Other reservesLoans qualifying

as equity Result for the year Equity

31 December 2018 18 6,500 81 16,437 804 23,840

First-time adoption of IFRS 16 Leases - - 130 - - 1301 January 2019 18 6,500 211 16,437 804 23,970

2018 profit appropriation - - 804 - (804) -Other - 92 276 (276) - 92

New loans 18 - - - 1,271 - 1,271Comprehensive income - - - - 1,362 1,36231 December 2019 18 6,592 1,291 17,432 1,362 26,695

Consolidated statement of changes in equitybefore profit appropriation



(x € 1,000) Note 2019 2018

Result before income tax 1,362 804

Adjustments for:Amortisation of intangible assets 10 2,690 2,635Depreciation of property, plant and equipment 11 1,749 208Impairment 11 137 50Movements in derivatives 24 - 424Financial income and expenses 6 6,799 4,968Tax on result from ordinary business operations 7 636 152

13,373 9,241

Changes in working capital:Movements in trade and other receivables 15/27 3,497 88,577Movements in current liabilities (excluding liabilities of a financing nature) 24/27 (2,072) 150Gross cash flow from operating activities 14,798 97,968

Interest paid (5,528) (5,427)Movement in corporate income tax (967) (1,012)Cash flow from operating activities 8,303 91,529

(x € 1,000) Note 2019 2018

Investments in intangible assets 10 (1,825) (556)Investments in property, plant and equipment 11 (1,061) (688)Investments in financial assets 12 (6,007) (35,058)Disposals of property, plant and equipment 11 22 129Disposals of intangible assets 10 1 14Proceeds from sale of property 17 758 -Investments in subsidiaries 1/27 - (26,510)Cash flow from investing activities (8,112) (62,669)

Equity 36 222 -Financing from acquisition 21 - 11,134New loans 21-24 507 5,286Repayment of bank loans and other loans 23/24 (1,469) (4,489)Factorline 24 633 (15,926)Cash flow from financing activities (107) (3,995)

Net cash flow 84 24,865

Cash and cash equivalentsBalance as at 1 January 28,706 3,841Balance as at 31 December 16 28,790 28,706Net cash flow 84 24,865

Consolidated cash flow statement for 2019before profit appropriation



Notes to the consolidated financial statements as at 31 December 2019General information

HeadFirst Source Holding B.V. (Chamber of Commerce no. 27328208) has its registered office at Polarisavenue 33, 2132 JH Hoofddorp, the Netherlands. Until 19 December 2018, HeadFirst Source Holding B.V. was part of the listed company Morefield Group N.V. (formerly HeadFirst Source Group N.V.). As of that same date, the acquisition holding company Beryllium acquired 100% of the shares in HeadFirst Source Holding B.V.

The activities of HeadFirst Source Holding B.V. and its subsidiaries (hereinafter referred to as ‘HeadFirst’) consist mainly in acting as intermediary for the temporary hiring of external staff, contracting, payrolling and search & matching of professionals for clients.

The following subsidiaries are included in these consolidated financial statements:

Subsidiaries Registered officeInterest in 2019

Interest in 2018

Source + N.V. Culemborg, Netherlands 100 % 100 %Source Interim Services B.V. Culemborg, Netherlands 100 % 100 %Source Automation B.V. Culemborg, Netherlands 100 % 100 %Source Payroll Services B.V. Culemborg, Netherlands 100 % 100 %Oyster Coast B.V. Culemborg, Netherlands 100 % 100 %Source Automation Belgium Bvba Diegem, Belgium 100 % 100 %Source Automation Luxembourg SA Luxembourg 100 % 100 %Source Payroll Holding B.V. Culemborg, Netherlands 100 % 100 %Source Payroll B.V. Culemborg, Netherlands 100 % 100 %HeadFirst Group Beheer B.V. Hoofddorp, Netherlands 100 % 100 %HeadFirst Houdstermaatschappij B.V. Hoofddorp, Netherlands 100 % 100 %HeadFirst B.V. Hoofddorp, Netherlands 100 % 100 %HeadFirst IT B.V. Hoofddorp, Netherlands 100 % 100 %Associates B.V. Amsterdam, Netherlands 100 % 100 %

Subsidiaries Registered officeInterest in 2019

Interest in 2018

Designated Professionals B.V. Hoofddorp, Netherlands 100 % 100 %Proud Holding B.V. De Ronde Venen, Netherlands 100 % 100 %Proud ICT B.V. De Ronde Venen, Netherlands 100 % 100 %Proud Payroll B.V. De Ronde Venen, Netherlands 100 % 100 %Proud Services B.V. De Ronde Venen, Netherlands 100 % 100 %Myler Holding B.V. Utrecht, Netherlands 100 % 100 %Myler IP B.V. Utrecht, Netherlands 100 % 100 %Myler B.V. Utrecht, Netherlands 100 % 100 %Jenrick Nederland B.V. Culemborg, Netherlands 100 % 100 %Jenrick Payroll Services B.V. Culemborg, Netherlands 100 % 100 %Staffing MS Holding B.V. Rotterdam, Netherlands 100 % 100 %Staffing Management Services B.V. Rotterdam, Netherlands 100 % 100 %Staffing MS Broker B.V. Rotterdam, Netherlands 100 % 100 %Staffing MS Broker 2 B.V. Rotterdam, Netherlands 100 % 100 %Staffing MS Payroll B.V. Rotterdam, Netherlands 100 % 100 %Staffing MS Payroll 2 B.V. Rotterdam, Netherlands 100 % 100 %

Basis of preparation

The 2019 consolidated financial statements were prepared by the Board of Directors and adopted on 30 July 2020.

Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union (EU-IFRS) and with Article 2:362, Paragraph 9 of the Dutch Civil Code.

Contents 39/ / HeadFirst Group 2019 Annual report / Notes to the consolidated financial statements

Valuation basisAssets and liabilities are measured at cost, unless stated otherwise. Financial assets and liabilities are measured at fair value upon initial measurement.

Going concernThe measurement of assets and liabilities is based on the assumption that the entirety of the legal entity’s activities in which those assets and liabilities are used will be continued.

Functional and presentation currencyThe financial statements are presented in euros, which is the functional currency of HeadFirst. All amounts in the tables have been rounded to the nearest thousand (€ 1,000), unless stated otherwise.

Use of estimates and judgementsThe preparation of the financial statements requires the Board of Directors to make judgements, estimates and assumptions which affect the application of the accounting policies as well as the reported amounts of assets, liabilities, income and expenses. The estimates and related assumptions are based on past experience as well as various other factors that are considered to be reasonable given the circumstances. The ensuing results form the basis for the judgement on the carrying amounts of assets and liabilities which are not readily ascertainable from other inputs. The actual results may differ from these estimates.

Fair value measurementA number of accounting policies and disclosures require the measurement of fair value, for financial as well as non-financial assets and liabilities.

When measuring the fair value of an asset or liability, HeadFirst uses observable market data as far as possible. Fair values are categorised into different levels on the basis of a fair value hierarchy, depending on the inputs which underlie the valuation techniques used.

HeadFirst uses the following levels: 1. quoted prices in active markets for identical instruments; (level 1)2. quoted prices for similar instruments or other valuation techniques for which significant

input factors are based on observable market data (such as swap prices, exchange rates); again, the markets are required to be active (observable inputs); (level 2)

3. valuation techniques for which the significant input factors are based on unobservable market data (unobservable inputs). (level 3)

The fair value is measured by discounting contractual cash flows through the application of a market interest rate and the credit risk of the company, using market inputs. The fair value does not differ materially from the carrying amount.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects the reporting period as well as future periods. The principal items in the financial statements which are based mainly on estimates by management comprise:• the recoverable amount in the annual impairment calculations, which is partly based on

assumptions such as the growth rate for revenue, a discount rate equal to the cost of equity and the percentage of regular clients. This item relates to the fair value of the software and the customer database;

• the goodwill; • the measurement of the required amount of provisions and accruals; for instance, the

estimate of invoices still to be received from suppliers, which affects the cost of sales;• an estimate of the useful life of non-current assets; • an estimate of the collectibility of the outstanding receivables, including the provision for

doubtful debts. • HeadFirst annually reviews the amounts of available carry-over losses and deferred taxation.

Deferred tax assets are recognised to the extent that it is probable for taxable profits to be available against which the losses can be offset. Determining the amount of the deferred tax assets requires significant judgement by management on the likely timing and amount of future taxable profits, in combination with future tax planning strategies. For the foreign companies, tax losses available for carryforward are capitalised to the extent that it is permitted by laws and regulations, and to the extent that the company sees sufficient possibilities for utilising them against future profits in the foreseeable future. This decision is based in part on the consideration of developments in the company’s contracts portfolio.

• Some loans qualify as equity on the basis of the conditions agreed.• For the purposes of revenue recognition, a distinction is applied depending on whether

HeadFirst acts as agent or as principal. See the note on ‘measurement of revenue recognition for proceeds’ as part of the ‘basis of consolidation’.


Significant accounting policies

HeadFirst has consistently applied the accounting policies set out below to all periods presented in these consolidated financial statements.

Basis of consolidationElimination of transactions on consolidationAll balances, transactions, assets and liabilities as well as any unrealised profits on transactions within HeadFirst are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated in the same way as unrealised gains, to the extent that there is no indication of impairment.

Business combinationsBusiness combinations are accounted for based on the acquisition method as of the acquisition date, i.e. the date on which control is transferred to HeadFirst. Control exists if HeadFirst has power over the entity, is exposed to the variable returns of the entity and has the ability to affect those returns through its power. In assessing control, HeadFirst considers potential voting rights which can be exercised at that time.

HeadFirst measures the goodwill for acquisitions as:• the fair value of the consideration transferred; plus• the recognised amount of any non-controlling interests in the acquiree; plus• the fair value of the pre-existing interest in the acquiree, if the business combination is

achieved in stages; less• the recognised net amount (as a rule, the fair value) of the identifiable assets acquired and

liabilities assumed.

If the difference is negative, this difference is recognised directly as income in profit or loss.

Costs incurred by HeadFirst in connection with a business combination, other than costs in connection with the issuance of shares or bonds, are recognised in profit or loss when incurred.

The fair value of a contingent consideration is recognised at the acquisition date. If that contingent consideration is classified as equity, it is not subsequently remeasured and its settlement is accounted for within equity. In all other cases, changes after initial recognition are recognised in profit or loss.

HeadFirst determines for each acquisition whether the non-controlling interest is recognised at the fair value of the non-controlling interest or at the proportionate share of the net assets.

Transaction under common controlIn the case of a transaction under common control, the carry-over accounting method is used. Using this method does not give rise to new fair value adjustments or goodwill, while differences in the purchase price and the net carrying amount are accounted for in equity.

SubsidiariesIf HeadFirst is able to exercise control over a participating interest, the latter is recognised as a subsidiary. HeadFirst controls a participating interest if all three of the following criteria are met:1. it has power over the participating interest;2. it has exposure, or rights, to variable returns from its involvement with the participating

interest;3. it has the ability to use its power over the participating interest to affect the amount of the

returns.

The results of the subsidiaries acquired during the year are consolidated from the date on which the company obtained control over the policies of the subsidiary. The financial information of the subsidiaries disposed of during the year continues to be included in the consolidation until the date on which control ceases. If control over a subsidiary is lost but a financial interest is retained, all assets and liabilities cease to be consolidated, and the remaining interest is initially recognised at fair value. The remaining difference is accounted for in profit or loss.

Discontinued operations or assets held for saleThe asset or group of assets (can be a cash-generating unit) which will be disposed of is held for sale if its carrying amount will be realised principally from a sale transaction rather than its continuing use. A non-current asset or group of assets is classified as ‘held for sale’, and measured at the lower of its carrying amount and its fair value less costs to sell. Once classified as held for sale, intangible assets as well as property, plant and equipment are no longer amortised or depreciated.

Classification as a discontinued operation is applied in case of an actual sale, or if the asset or the group of assets meets the criteria for assets ‘held for sale’. If the asset or the group of assets qualifies as a discontinued operation, the consolidated statement of comprehensive income is adjusted as if the asset or group of assets had been disposed of as from the beginning of the financial year.


Foreign currencies Transactions, receivables and liabilities in foreign currenciesTransactions in foreign currencies are accounted for at the exchange rates applying on the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency on the balance sheet date at the exchange rate prevailing on that date. Exchange differences arising from this translation are recognised directly in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies that are measured on the basis of historical cost are translated at the exchange rate on the transaction date.

Translation differences on long-term intra-group loans that are effectively an increase or decrease in the net investment of foreign subsidiaries are added or charged directly to equity in the translation reserve.

Income statement

Revenue measurement and revenue recognitionRevenue is the fair value of the consideration received for providing services within the ordinary business operations of HeadFirst. Revenue is presented net of turnover tax, discounts and similar amounts, and after elimination of intra-group transactions.

HeadFirst recognises revenue if the amount of the revenue can be reliably determined, if it is probable that the future economic benefits will flow to the entity and if the specific criteria for each activity of HeadFirst are met, as described below. For all services of HeadFirst, the delivery obligation is realised progressively over time. The method that is applied to determine progress is based on the ‘output method’, i.e. time elapsed. This method provides the most faithful depiction of the realisation of the services to the client.

ContractingContracting comprises the administrative, contractual as well as financial handling of agreements between clients and independent contractors or suppliers carrying out the assignment. HeadFirst acts as agent in these situations. The consideration for HeadFirst is recognised as net revenue in the period in which the relevant service is invoiced.

Payrolling of professionalsIn a number of cases, HeadFirst employs professionals on the basis of temporary employment contracts for the duration of the assignment. In 2018, HeadFirst reassessed this form of service provision and concluded that HeadFirst acts as principal. The added value of the service provision is realised during the entire period in which the work is performed by the professional. With effect from this financial year, HeadFirst has accounted for the revenue from the payrolling of professionals on a gross basis and has restated the comparative amounts. This restatement results in higher net revenue of € 13.8 million. The restatement does not affect the amount of the gross margin.

MatchmakingMatchmaking comprises searching for, selecting and placing professionals based on a job profile or an assignment description provided by clients. HeadFirst places the professionals with the client and guarantees the quality of the professional for the duration of the assignment. HeadFirst acts as principal with regard to these assignments. The time recorded at the rate agreed with HeadFirst is recognised as revenue.

Other servicesHeadFirst offers additional services to suppliers and independent professionals. Among other things, these additional services comprise accelerated payment of invoices, attendance at knowledge sessions and discounts for training programmes, insurances as well as mobility products.

Gross invoice valueThe gross invoice value represents the amounts charged to clients of HeadFirst for services provided, regardless of whether it acts as agent or as principal. If HeadFirst acts as MSP, contracts on behalf of the client and manages billing as well as payment flows, this managed revenue is also included in the gross invoice value.

Cost of salesCosts of purchase, mainly including wages/salaries and temporary hiring of third parties, are attributed to the financial year in which the related income is recognised.

Notes to the consolidated financial statements


Other operating costsShort-term leases and leases of low-value assets Payments associated with short-term leases and all leases of low-value assets are recognised on a straight-line basis as a liability in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets are assets with a value when new of less than € 5,000.

Financial income and expenseThe financial income and expenses of HeadFirst include the following:• interest income;• interest expense;• exchange rate gains and losses on financial assets as well as financial liabilities.

TaxesCorporate income tax comprises corporate income tax payable and receivable for the reporting period as well as deferred corporate income tax. Corporate income tax is accounted for in profit or loss, except in so far as it relates to a business combination, or to items that are recognised directly in equity or other comprehensive income.

Current corporate income taxCurrent corporate income tax comprises the expected tax payable or receivable on the taxable profit or loss for the financial year as well as any adjustments to the tax payable or receivable in respect of previous years. The corporate income tax is computed on the accounting result before tax on the basis of the current tax rates, taking account of tax facilities.

Current tax assets and liabilities are offset only if the general principle for offsetting is satisfied.

The position for current corporate income tax is also classified in the financial statements as corporation tax receivable/debt. As Beryllium B.V. is the head of the tax entity for corporate tax purposes, final settlement will be processed via Beryllium’s current account.

Deferred corporate income taxDeferred corporate income tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes on the one hand and the amounts for tax purposes of those items on the other. Deferred tax liabilities are not recognised for:• temporary differences relating to the initial recognition of assets or liabilities in a transaction

which does not involve a business combination and which affects neither accounting nor taxable profit or loss;

• temporary differences related to investments in subsidiaries and joint ventures, in so far as HeadFirst is able to control the timing of the reversal of these temporary differences and it is probable that they will not reverse in the foreseeable future;

• taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be offset.

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable for the related tax benefit to be realised; such reductions are reversed as soon as it is probable that taxable profits will increase again in future.

Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that future taxable profits will be available against which they can be used.

Deferred income taxes are measured on the basis of the tax rates (20%) that are expected to be applicable when the temporary differences reverse, based on tax rates that are enacted or substantively enacted at the reporting date.

The measurement of deferred income taxes reflects the tax consequences that would follow from the manner in which HeadFirst expects to recover or settle the carrying amount of the assets and liabilities at the end of the reporting period.

Deferred tax assets and liabilities are offset only if the general principle for offsetting is satisfied.


Balance sheet

Intangible assets and goodwillHeadFirst applies the following amortisation periods using the straight-line method for the intangible assets with a finite useful life.• Customer database 10 years• Brand name 10 years• Software 5–10 years

GoodwillGoodwill comprises the difference identified upon the acquisition of group companies between the purchase price (transaction amount) on the one hand and the fair value of the acquired assets and liabilities on the other, based on the accounting policies of HeadFirst. To that end, the goodwill is allocated to the cash-generating unit representing the lowest level at which HeadFirst monitors goodwill for internal management purposes with a view to internal control. Goodwill and other intangible assets are capitalised net of accumulated amortisation as well as accumulated impairment.

Goodwill is not amortised, but its carrying amount is tested for impairment annually or when there is an indication of impairment. Any negative goodwill (badwill) arising upon acquisition is directly credited to profit or loss.

Customer database and contractsCustomer databases and contracts obtained as part of a business combination are measured at fair value based on the cost approach method at the time of acquisition. Customer databases and contracts have a finite economic life; they are measured at original cost, net of accumulated depreciation and impairment. Amortisation is applied over the estimated useful life of the asset.

Brand nameBrand names that were obtained as part of a business combination are measured at fair value based on the ‘Relief from royalty’ method at the time of acquisition. Brand names have finite economic lives, and are measured at original cost net of accumulated depreciation and impairment. Amortisation is applied on a straight-line basis over the estimated useful life of the asset.

SoftwareSoftware comprises the software licences and internally developed ICT applications items. Internally developed software is capitalised at the costs of the internal as well as external hours worked on the basis of time recording in the execution and closing stage of ICT projects. Internal as well as external hours worked in the initiation and definition stage are not capitalised.

Software that is obtained as part of a business combination is measured at fair value based on the Relief from royalty method at the time of acquisition.

Software is amortised on a straight-line basis over the useful life.

Property, plant and equipment BuildingsBuildings are measured at cost net of accumulated depreciation and any impairment. The costs comprise all costs directly attributable to the construction of the building. Subsequent expenditure, including for renovations, is only capitalised if it is probable that future economic benefits will arise from it. Regular maintenance and minor repairs are accounted for in profit or loss.

The residual value of the asset, the useful life as well as the valuation methods are reviewed annually and adjusted at the end of the year if necessary.

Buildings are depreciated annually on a straight-line basis. The depreciation rate is 4% for buildings, or between 10% and 20% for additional capitalised renovation costs.

Right-of-use assetsWhen entering into an agreement, HeadFirst assesses whether it gives HeadFirst the right to determine the use of an asset (‘control’) during a certain period, in exchange for which HeadFirst pays a consideration to a third party. In this case, the agreement is classified as a lease and HeadFirst recognises a right-of-use asset in the balance sheet as well a lease liability on commencement of the contract. Right-of-use assets are measured at cost, comprising the following components:• the amount of the initial measurement of the lease liability;• any lease payments made at or before the commencement date, less any lease rebates

received;• any initial direct costs;• estimated restoration costs.


Right-of-use assets are subsequently depreciated using the straight-line method from the commencement date to the end of the useful life. This useful life is derived from the strategic useful life of the asset applied by management. Right-of-use assets are periodically adjusted in case of remeasurements of the lease liability and impairment (if applicable).

Other tangible fixed assetsOther tangible fixed assets are measured at cost net of accumulated depreciation as well as impairment if applicable.

In testing for impairment, the recoverable amount is determined for the relevant asset or of the relevant cash-generating unit to which it belongs. The recoverable amount is the higher of fair value less costs to sell and value in use. If the carrying amount is higher than the recoverable amount, the asset is written down to the lower recoverable amount.

Other tangible fixed assets are depreciated annually using the straight-line method.The depreciation rate used for other tangible fixed assets is 20%.

Financial instrumentsHeadFirst classifies non-derivative financial assets in the following categories: financial assets at fair value through profit or loss, financial assets held to maturity, loans and receivables. HeadFirst classifies non-derivative financial liabilities in the category of financial liabilities at amortised cost.

Non-derivative financial assets and financial liabilities – recognition and derecognitionHeadFirst initially recognises loans and receivables on the date on which they arise. All other financial assets and financial liabilities are initially recognised on the transaction date.

HeadFirst derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or if HeadFirst transfers the contractual rights to receive the cash flows from the financial asset in a transaction in which virtually all the risks and rewards of ownership of this asset are transferred. If HeadFirst retains or creates an interest in the transferred financial assets, that interest is recognised as a separate asset or liability.

HeadFirst derecognises a financial liability when the contractual obligations are discharged or cancelled, or expire.

Financial assets and liabilities are offset, and the resulting net amount is presented in the balance sheet, when and only when HeadFirst has a legally enforceable right to offset the amounts, and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. Non-derivative financial assets – measurementFinancial assets at fair value through profit or lossA financial asset is classified as measured at fair value through profit or loss if it is held for trading, or if it is designated as such on initial recognition. Directly attributable transaction costs are recognised in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value and any movements therein, including any interest or dividend income, are recognised in profit or loss.

Held-to-maturity financial assetsThese assets are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortised cost.

Loans and receivablesThese assets are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortised cost using the effective interest method.

They include the following categories:• Trade and other receivables

The receivables are initially recognised at fair value and subsequently at amortised cost using the effective interest method less the adjustments deemed necessary for irrecoverable amounts. The irrecoverable amount is recognised in profit or loss as part of the costs to sell. Given the often short term, the fair value and amortised cost of these items are generally substantially the same as the nominal value.

• Cash and cash equivalents Cash and cash equivalents in the balance sheet comprise bank balances as well as cash with a term of at most three months.


Non-derivative financial liabilities – measurementNon-derivative financial liabilities are initially measured at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method.

They include the following categories:• Loans

Loans are initially measured at fair value, net of transaction costs, and subsequently at amortised cost. The difference between the amount received (net of transaction costs) and the redemption amount is recognised in profit or loss during the term of the loan using the effective interest method. Loans are accounted for as current liabilities, unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

• Lease liabilities Lease liabilities comprise the net present value of the fixed lease payments increased by variable lease payments based on an index or a rate, initially measured using an index or rate on the commencement date of the lease.

Lease payments that are made under reasonably certain options for extension are also included in the measurement of the liability. HeadFirst also considers other factors in this connection, including historical lease terms as well as the costs and business interruption that are necessary to replace the leased asset. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which will often be the case for leases in the group, the incremental borrowing rate is used. The incremental borrowing rate is the rate that HeadFirst would have to pay in order to borrow the funds necessary to obtain an asset of a similar value in a similar economic environment with similar terms and guarantees. The group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset. Lease payments are divided between right-of-use and finance cost. The finance cost is charged to profit or loss over the lease period, applying a constant periodic interest rate on the remaining balance of the liability for each period.

• Trade and other payables Trade and other payables are initially measured at fair value and subsequently at amortised cost, using the effective interest method. As the term of the trade and other payables is less than 12 months after the balance sheet date, the nominal value of these liabilities will almost always be equal to amortised cost.

Compound financial instruments and related derivativesCompound financial instruments issued by HeadFirst comprise loans for which the terms of the loan agreement have been reformulated such that they qualify as equity due to the nature of the agreement. The loan component of the compound financial instrument is initially measured at fair value. Subsequent to initial recognition, the loan is measured at amortised cost. The difference between the amortised cost and the ultimate redemption value is recognised as interest expense based on the effective interest during the term of the liabilities.

The difference between the fair value of the compound instrument and the fair value of the loan component is recognised separately. If that value is classified as an equity component, this right is accounted for as equity. The equity component of a compound financial instrument is not remeasured after initial recognition, except upon expiry. If this value is not classified as an equity component, it is accounted for as a derivative. These derivatives are measured at fair value. Movements in value are recognised directly in profit or loss.

DerivativesDerivatives are initially recognised at fair value, with attributable transaction costs being accounted for in profit or loss as incurred. They are subsequently measured at fair value through profit or loss. HeadFirst does not apply hedge accounting.

Share capitalOrdinary sharesIncremental costs directly attributable to the issue of ordinary shares, net of any tax effects, are deduced from equity. Income tax relating to transaction costs of equity transactions is accounted for in accordance with IAS 12.


ImpairmentImpairment of financial instruments (IFRS 9 Expected credit loss model)The group has two types of financial instruments to which the expected credit loss model under IFRS 9 applies:• Non-current financial assets;• Trade receivables.

Application of IFRS 9 does not lead to a material adjustment of the provision, as this provision is already based on expected impairment estimated at an individual level.

Although cash and cash equivalents are also subject to impairment under IFRS 9, the identified impairment is negligible.

Non-derivative financial assetsFinancial assets not designated as measured at fair value through profit or loss are assessed at each reporting date to determine whether there is objective evidence of impairment.

Objective evidence that financial assets are impaired includes:• default or delinquency in payments by a debtor;• indications that a debtor or issuer will enter bankruptcy;• adverse changes in the payment status of borrowers or issuers;• the disappearance of an active market for a specific security;• observable data indicating that there is a measurable decrease in the expected cash flows

from a group of financial assets.

Financial assets measured at amortised costHeadFirst considers evidence of impairment for these assets at both the level of individual assets and the collective level. All individually significant assets are individually assessed for impairment.

Assets found not to be individually impaired are then collectively assessed for any impairment which has been incurred but which cannot yet be identified individually.

Assets that are not individually significant are collectively assessed for impairment as well. Collective assessment is performed by grouping together assets with similar risk characteristics.

In assessing collective impairment, HeadFirst uses historical trends for the timing of recoveries and the amount of losses incurred.

The outcomes are adjusted if management considers the current economic and credit conditions to be such that the actual losses are likely to be greater or lesser than suggested by historical trends.

An impairment loss is calculated as the difference between the carrying amount of the asset and the present value of the expected future cash flows, discounted at the original effective interest rate of the asset. Losses are recognised in profit or loss and reflected in an allowance account. If HeadFirst believes that there are no realistic prospects of recovering the asset, the relevant amounts are written off. If the amount of the impairment loss decreases and this decrease can be related objectively to an event occurring after the impairment was recognised in profit or loss, the previously recognised impairment loss is reversed through profit or loss.

Non-financial assetsAt each reporting date, the carrying amounts of the non-financial assets of HeadFirst, except for inventories and deferred tax assets, are reviewed to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated. The recoverable amount of goodwill is estimated each year.

For impairment testing, assets are grouped together into the smallest identifiable group of assets that generates cash flows from continuing use which are largely independent of the cash inflows of other assets or cash-generating units (CGU). Goodwill acquired in a business combination is allocated to CGUs or groups of CGUs which are expected to benefit from the synergies of the combination.


The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In determining the value in use, the present value of the estimated future cash flows is calculated using a pre-tax discount rate that reflects both current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognised if the carrying amount of an asset or the CGU to which the asset belongs exceeds the estimated recoverable amount.

Impairment losses are recognised in profit or loss under amortisation and depreciation. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

Impairment losses in respect of goodwill are not reversed. For other assets, an impairment loss is reversed only to the extent that the carrying amount of the asset does not exceed the carrying amount which would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Cash and cash equivalentsCash and cash equivalents comprise cash and bank balances. They are measured at fair value, which approximates their carrying amount. Cash and cash equivalents have a term of less than one year. Unless stated otherwise, cash and cash equivalents are at the free disposal of the company.

EquityThe issued capital comprises the nominal amounts paid up on the issued shares. The share premium reserve comprises the amounts paid on issued shares, to the extent that those payments exceed the nominal value of the relevant shares. Retained earnings are an accumulation of the annual net profit (the portion of profit attributable to the shareholders) less the dividend distributed. The other reserves mainly comprise retained earnings.

Ordinary shares of HeadFirst are part of equity.

The purchase price of repurchased shares is deducted from other reserves until they are cancelled or reissued. The dividend distributable to holders of ordinary shares is recognised as a liability when the General Meeting of Shareholders approves the dividend proposal.

Non-current liabilitiesFor deferred taxation, see the accounting policy for ‘Income taxes’.

The other liabilities and provisions concern legal or constructive obligations which will probably lead to an expenditure and which can be reliably estimated.

Employee benefitsShort-term employee benefitsShort-term employee benefits are recognised as costs when the related services are rendered. A liability is recognised for the amount expected to be paid if HeadFirst has a legally enforceable or constructive obligation to pay this amount as a consequence of services rendered by the employee and the liability can be reliably measured.

Defined contribution planThe pension plan for the employees of the companies is a defined contribution plan. HeadFirst pays defined contributions to pension insurers and has no further payment obligations other than these defined contributions. The contributions are recognised as an expense when they are due and attributed to the period to which they relate.

Severance paymentsSeverance payments are recognised as an expense when HeadFirst can no longer withdraw the offer of those benefits or, if earlier, when HeadFirst recognises the costs for the restructuring. If the severance payments are not expected to be settled wholly before twelve months after the reporting date, they are discounted and recognised as a non-current liability.

LeasesDetermining whether an arrangement contains a leaseHeadFirst determines on the commencement of an arrangement whether this arrangement is or contains a lease.

Leased assetsHeadFirst has not entered into any finance leases but only into operating leases, which have been incorporated in line with IFRS 16 requirements.


Cash flow statement

The cash flow statement is prepared using the indirect method and the operating cash flow is derived from profit or loss as well as other movements between the opening and closing balance sheet. The cash and cash equivalents item in the cash flow statement excludes current account debts to credit institutions which are recognised under current liabilities. The amount payable to credit institutions under the factoring agreement is accounted for separately under cash flows from financing activities.

Cash flows in foreign currencies are translated at an estimated average exchange rate. Exchange differences on cash and cash equivalents are presented separately in the cash flow statement. Receipts and payments relating to interest as well as income taxes are recognised under cash flows from operating activities. The purchase price of the acquired group company is recognised under cash flows from investing activities, to the extent that payment was made in cash. The cash held in the acquired group company has been deducted from the purchase price.

Related parties

The majority shareholder, subsidiaries, the Supervisory Board, the Management Board, senior management or family members of those persons qualify as related parties of HeadFirst.

Related-party transactions are performed at market-based prices. Transactions with members of the Management Board, senior management or family members of those persons are disclosed in Note 28 ‘Related-party transactions’. No loans have been provided to the Management Board, senior management or family members of those persons.

Amendments in the IFRS standards in the accounting policies and disclosure

New standards and interpretations adoptedIFRS 9 ‘Financial Instruments’ and IFRS 15 ‘Revenue from Contracts with Customers’ have been adopted with effect from 1 January 2018. Neither of them affect the measurement and classification of the assets and liabilities of the group, or its results or cash flows. The opening balance of the ‘result for the year’ item has therefore not been adjusted.

IFRS 16 applies to financial years beginning on or after 1 January 2019 and has been adopted as such in the financial statements. The new standard requires the recognition of virtually all liabilities under leases, rental agreements and ground leases on the balance sheet.

The new standard allows exceptions for short-term leases and leases of low-value assets. HeadFirst has elected not to adopt the standard early.

Instead of recognising expenses under operating leases, IFRS 16 requires accounting for depreciation charges for the right-of-use assets by class of underlying asset and interest expense on lease liabilities.

IFRS 16 ‘Leases’IFRS 16 ‘Leases’ was published in January 2016 and introduces a new definition of leases, under which most leases are required to be recognised by the lessee. This requirement is effected by capitalising the right of use for the leased asset for the term of the contract and recognising a liability for the lease payments. It replaces the existing measurement of leases based mainly on IAS 17 ‘Leases’. HeadFirst implemented IFRS 16 with effect from 1 January 2019 for HeadFirst as lessee and lessor (‘modified retrospective approach’).

HeadFirst has a limited number of leases, mainly for immovable property and lease cars. The transition to IFRS 16 had a limited impact on the balance sheet and a smaller impact on the opening balance of equity.

On initial application of IFRS 16, HeadFirst used the following practical expedients as permitted when initially applying the new standard:• relying on earlier assessments of whether leases are onerous;• accounting for leases with a remaining lease term of less than 12 months as at 1 January

2019 as short-term leases;• not reassessing whether a contract is or contains a lease at the date of initial application;• excluding initial direct costs from the measurement of the right-of-use assets at the date

of initial application;• using hindsight in determining the lease term if the contract contains options to extend

or terminate the lease.


As from 1 January 2019, the group recognised right-of-use assets of € 2.8 million and a corresponding lease liability of € 2.8 million. The assets are accounted for as non-current assets, while the liabilities are accounted for under non-current and current liabilities in the balance sheet of HeadFirst. In addition to the impacts referred to above, the other liabilities item was affected owing to rent-free periods provided by lessors before the date of transition. This impact led to the cancellation of the liability of € 0.1 million, which was added to the other reserves. The right of use expires at the end of 2025.

Effects of IFRS 16

1 January 2019 IFRS 16 adjustments1 January 2019

adjusted

Non-current assets 114,094 2,849 116,943 Current assets 94,296 94,296 Total assets 208,390 2,849 211,239

Equity 23,840 130 23,970 Non-current liabilities 11,332 1,506 12,838 Current liabilities 173,218 1,213 174,431 Total liabilities 208,390 2,849 211,239

The impact on the income statement for the year ending 31 December 2019 is a decrease in operating result of € 0.2 million, including the increase in depreciation charges of € 1.4 million. Financing costs also increased by € 0.2 million.

New standards and interpretaions not yet adoptedA number of standards/amendments and interpretations proposed by the IASB apply to financial years beginning on or after 1 January 2020, but they are not expected to have a material effect on the financial position and operating result of HeadFirst. HeadFirst has elected not to adopt these standards/amendments early.

1 Business combinations

Myler Holding B.V.On 4 July 2018, HeadFirst Source Holding B.V., H2 Equity Partners Fund IV Holding W.A. and Numa Innovations B.V. signed an agreement to acquire Myler Holding B.V. as well as its subsidiaries (hereinafter referred to as ‘Myler’). With effect from 1 October 2018, HeadFirst Source Holding B.V. acquired 100% of the shares of Myler, following which those companies were consolidated.

Myler was established in 2009 with the objective of providing temporary hiring solutions for the flexible IT workforce of organizations. It acquired Jenrick in 2015. At present, Myler is a leading company in the field of organising temporary external hiring. Myler provides its services to a range of clients in the profit and non-profit sectors, including ASML, Achmea, the Central Administration Office (CAK) and the Ministry of Defence. Global sourcing, in which it cooperates with partners throughout the world to recruit and contract scarce IT specialists for clients in the Netherlands, is a unique component of its service package. It showcases the innovative nature of the company.

The benefits of the acquisition are:• improvement to the market position of HeadFirst;• broadening and strengthening of the client portfolio;• revenue and cost synergies;• good profit contribution to the group;• opportunities for selling additional services of HeadFirst (Premium) to the Myler network

as well;• reinforcement of the international activities of HeadFirst.

This combination enables HeadFirst to strengthen its role as market leader in the field of intermediary services and temporary hiring of external professionals; matchmaking, contracting as well as payrolling.


The following table presents a summary of the total consideration paid for Myler Holding B.V. as well as the fair values of the identifiable assets and liabilities recognised at the acquisition date.

(x € 1,000) Fair value

The assets and liabilities of the transaction:Software (platform)* 2,486Customer contracts 6,475Property, plant and equipment 221Trade and other receivables 30,473Current account relationship with HeadFirst 32,991Cash and cash equivalents 1,030Deferred corporate income tax liability (529)Financing (34,417)Trade payables (20,034)Current liabilities (16,277)Total assets and liabilities 2,419

Goodwill, net* 24,299Current account settlement with seller (77)Repayment of Myler Holding B.V. loan 1,506Transaction amount 28,147Liquidities purchased as part of the transaction 1,030Total transaction amount, net of liquidities purchased as part of the transaction 27,117

The goodwill is attributable to the profitability of the acquired activities. It is not deductible for corporate income tax purposes.

The entire transaction amount was paid in cash, for which financing was obtained via TH ruvercap Cayman Ltd (Pimco). See the disclosures in Note 15.

The intangible asset comprises the measurement of the customer database of Myler (€ 6,475,000) and the measurement of the software platform Workspace (€ 2,486,000).

The customer database was measured using the income approach method. The measurement included estimating the attrition rate for the customers (over time, the loss of customers or loss of revenue per customer) in order to estimate the future cash flows. The value is approximately one time the annual margin, as many of the contracts have a term of one year. (level 3)

The measurement of the Workspace platform is based on a measurement prepared by an external firm, which involved determining what the costs would be to build exactly the same system (‘code value’) and taking account of the optimisation costs (‘debt value’). This ‘technical value’ is the current value of the system. (level 3)

The fair value of the trade and other receivables at the acquisition date is € 30,473,000. This value does not differ materially from the contractual amounts, taking account of the provisions for doubtful debts.The fair values of trade payables do not differ materially from the carrying amounts and, just as the total trade receivables, had been virtually settled in full at the date of preparing the financial statements.

The total costs relating to the acquisition of Myler Holding B.V. were passed on in full to the acquisition holding company Beryllium B.V.

In 2019, the software platform was subject to revaluation. The platform was valued at zero, which resulted in an increase in goodwill of € 2,486,000.

Between the acquisition date of 1 October 2018 and the balance sheet date of 31 December 2018, profit and revenue were included in the consolidated profit for 2018.

On a consolidated basis, Myler Holding B.V. and subsidiaries would have reported a profit after income tax of € 0.5 million and net revenue of € 93.5 million in 2018 if the result as well as the revenue of Myler Holding B.V. and its subsidiaries had been accounted for with effect from 1 January 2018. The consolidated gross invoice value for 2018 was € 218.2 million.

Staffing MS Holding B.V.On 20 September 2018, HeadFirst Source Holding B.V., Enthri Capital B.V. and Back to Back Consultancy B.V. signed an agreement to acquire Staffing MS Holding B.V. as well as its subsidiaries (hereinafter referred to as ‘Staffing MS’). With effect from 5 December 2018, HeadFirst Source Holding B.V. acquired 100% of the shares of Staffing MS, following which those companies were consolidated as at 31 December 2018.

Staffing MS was established in 2008, since when it has been active as an expert in the field of temporary hiring flexible labour. It is the first wholly neutral, independent Managed Service Provider and is principally known as a specialist in the marketplace principle. It is a leading

* In 2019, the valuation of software was adjusted to zero, which resulted in an increased goodwill amount of € 26,785.


supplier of the Dynamic Purchasing System (DPS), which can be used by public or semi-public organizations to hire external professionals in compliance with European tendering rules. Staffing MS works mainly for municipalities as well as educational and healthcare institutions in the Netherlands, but also for major international profit organizations with establishments in various European countries.

The benefits of the acquisition are:• improvement to the market leadership of HeadFirst;• expansion in diversity of flex service provision to potential clients;• broadening of the client portfolio to ‘new’ sectors;• strong impetus to international ambitions through addition of MSP services, which

are used extensively by multinationals.

The following table presents a summary of the total consideration paid for Staffing MS Holding B.V. as well as the fair values of the identifiable assets and liabilities recognised at the acquisition date.

(x € 1,000) Fair value

The assets and liabilities of the transaction:Customer contracts 690Intangible assets 7Property, plant and equipment 52Deferred tax asset 745Trade and other receivables 6,996Cash and cash equivalents 3,276Deferred corporate income tax liability (138)Amounts owed to credit institutions (995)Trade payables (9,219)Current liabilities (1,357)Total assets and liabilities 57

Goodwill, net 2,617Transaction amount 2,674Liquidities purchased as part of the transaction and amounts owed to credit institutions 2,281Total transaction amount, net of liquidities purchased as part of the transaction 393

The goodwill is attributable to the profitability of the acquired activities. It is not deductible for corporate income tax purposes.

An amount of € 1.7 million of the transaction amount was paid in cash on the closing date. The remaining € 1.0 million is due one year after the closing date.

The intangible assets comprise the measurement of the customer database of Staffing MS Holding B.V. (€ 690,000). The customer database was measured using the income approach method. The measurement included estimating the attrition rate for the customers (over time, the loss of customers or loss of revenue per customer) in order to estimate the future cash flows. The value is approximately one time the annual margin, as many of the contracts have a term of one year. (level 3)

The fair value of the trade and other receivables at the acquisition date is € 7.0 million. This value does not differ materially from the contractual amounts, taking account of the provisions for doubtful debts.

The fair values of trade payables of € 9.2 million do not differ materially from the carrying amounts and, just as the total trade receivables, had been virtually settled in full at the date of preparing the financial statements.

The total costs of € 93,000 in relation to the acquisition of Staffing MS Holding B.V. were recognised directly in profit or loss and are included in Other operating costs (Note 5).

Between the acquisition date of 5 December 2018 and the balance sheet date of 31 December 2018, result and revenue were qualified as non-material, which is why they were not recognised in the consolidated income statement for 2018.

On a consolidated basis, Staffing MS would have reported a loss after income tax of € 31 million and net revenue of € 25 million in 2018 if the result as well as the revenue of Staffing MS had been accounted for with effect from 1 January 2018. The combined gross invoice value for 2018 was € 81.7 million.

Liquidity riskCash flow analyses are performed by operating companies and HeadFirst as a whole. HeadFirst monitors the liquidity requirement to hold sufficient liquidities for operating activities or to obtain liquidities on a timely basis by financing without exceeding externally set limits. To that end, HeadFirst performs adequate liquidity risk management consisting of: the retention of sufficient cash and cash equivalents, the availability of financing by means of committed credit facilities and pledging trade receivables, and the ability to close out market positions.

Surpluses in excess of the necessary liquidity requirement within operational entities can be transferred within HeadFirst to HeadFirst, where they can be invested in other activities of HeadFirst.

Management manages the rolling forecasts of the liquidity position on the basis of expected cash flows. In general, this activity is performed on a local level at the operating companies, within the parameters and limits set by HeadFirst. Those limits are determined while taking into account the liquidity of the market in which the relevant company operates. HeadFirst’s liquidity management also comprises forecasting cash flows and holding sufficient liquidities on that basis. A significant part of this process is also monitoring the development of the accounts receivables level, the amount of the factorline and credit management in order to monitor working capital in combination with the liquidity forecasts.


2 Financial risk management

The use of financial instruments are the result of HeadFirst’s operating activities. The financial instruments of HeadFirst include cash and cash equivalents, accounts receivable, other receivables, accounts payable, derivatives from convertible loans and other debts. HeadFirst’s current policy is not to use derivative financial instruments in order to hedge potential risks with regard to these financial instruments.

An exception is the interest rate derivative that Source+ NV entered into in connection with the mortgage loan for its office building.

With regard to the use of financial instruments, HeadFirst is exposed to the following risks:

Credit riskThe maximum risk exposure for HeadFirst is the carrying amount of the financial assets recognised in the balance sheet.

The credit risk arises from cash and cash equivalents as well as deposits at banks and financial institutions, and from the transactions with debtors. Only independently rated parties with at least an A classification are accepted for banks and financial institutions.

The credit risk arises mainly from debtors. HeadFirst has a debtor portfolio of creditworthy customers spread across various regions. In recent years, the amounts written off on debtors have been very low compared with the revenue achieved. Management assesses debtors’ creditworthiness based on financial position, past experience and other factors. Individual risk limits are defined on the basis of internal or external classifications, in accordance with the criteria set by management. The use of the credit limits is regularly assessed. As a result, management believes that the credit risk is managed by adequate debtor management. For more information, see Note 16 Trade and other receivables.


The table below presents an analysis of the financial liabilities of the group allocated between the various periods for which cash outflows are expected on the basis of the contractual obligations. These cash flows are non-discounted.

(x € 1,000) Long-term loans

Long-term amounts owed to credit

institutions Short-term loans Lease liabilityOther current

liabilities Total

31 December 2019< 3 months - - - 288 167,618 167,906Between 3 months and 1 year - - 600 797 2,500 3,897Between 1 and 2 years 1,436 1,437 - 923 1,126 4,922Between 2 and 5 years 9,544 - - 549 - 10,093More than 5 years - - - 6 - 6Total 10,980 1,437 600 2,563 171,244 186,824

Adjustment of financial liabilities and future interest not recognised in the carrying amount (1,436) - - - - (1,436)Carrying amount of liabilities as at 31 December 2019 9,544 1,437 600 2,563 171,244 185,388

(x € 1,000) Long-term loans

Long-term amounts owed to credit

institutions Short-term loansOther current

liabilities Total

31 December 2018< 3 months - - 24 168,250 168,274Between 3 months and 1 year - - 2,368 2,500 4,868Between 1 and 2 years 2,655 89 - - 2,744Between 2 and 5 years 8,076 326 - - 8,402More than 5 years 299 - - 299Total 10,731 714 2,392 170,750 184,587

Adjustment of financial liabilities and future interest not recognised in the carrying amount (2,655) (113) 76 - (2,692)Carrying amount of liabilities as at 31 December 2018 8,076 601 2,468 170,750 181,895


Other current liabilities includes the financing under the factor facility, presented under repayment within 3 months. This liability is equal to the amount of the balance of accounts receivable that is covered by the factoring agreement and in effect continues indefinitely.

Other current liabilities with a repayment obligation shorter than 3 months include the other current liabilities, including trade payables, etc.

Currency riskTransactions with foreign customers, suppliers as well as subsidiaries take place in euros and especially pounds sterling. HeadFirst currently does not use financial instruments to hedge currency risks. HeadFirst buys and sells foreign currencies, especially pounds sterling, directly upon receipt or payment. The receivable and payable invoices outstanding have a payment term of 30 days. Consequently, the currency risk in relation to these current receivables and liabilities is limited. As at 31 December 2019, the amount outstanding of accounts receivable in foreign currencies was € 1.7 million and the amount outstanding of accounts payable was € 841,000. The currency risk from a 1% difference in the exchange rate is € 8,000. Outstanding accounts receivable and payable are settled simultaneously. The effect of an exchange rate increase or decrease is therefore limited, as it affects both at the same time.

Interest rate riskHeadFirst has an interest-bearing mortgage loan. The interest on this loan is based on Euribor with a spread, which results in a cash flow interest rate risk. There is also an interest rate derivative. This interest rate derivative is used in order to convert the variable interest on the mortgage loan into a fixed interest rate. The other loans carry fixed interest, as a result of which the risk is limited.

Interest rate risk sensitivity analysis A sensitivity analysis was prepared on the basis of the interest rate exposure at the beginning of the financial year. The impact on profit of a 1% decrease or increase in the interest rate would have been € 930,000. The interest rate risk is limited to the loan provided relation to the agreement with TH ruvercap Cayman Ltd (Pimco), for which the interest rate is based on Euribor.

Risk management for assetsHeadFirst’s objective in managing assets is to continue operating as a going concern so as to generate returns for the shareholders and benefits for other stakeholders as well as to retain an optimum capital structure so as to minimise the costs of capital. The strategy for the capital structure was not changed during 2019 compared with the strategy for 2018.

This strategy is targeted at a ratio of between 10% and 20% of equity compared with total assets. A lower equity-total assets ratio in relation to the strategy may entail that access to the capital market is hampered, that the company will have to pay higher interest on borrowed capital and that the company’s rating will be downgraded, as a result of which it will not be eligible for being awarded tenders in public tenders and credit insurers cease to include the company in their cover.

The ratios of equity to total assets are:

(x € 1,000) 31 December 2019 31 December 2018

Total equity 26,695 23,840Total borrowed capital 184,261 184,550Total assets 210,956 208,390Ratio of equity / total assets 12.6% 11.4%

The summary above shows that the ratio of equity to total assets was within the strategic objectives for the years 2018 and 2019. HeadFirst continues its aim to move closer to the 20% ratio.

3 Net revenue

(x € 1,000) 2019 2018

Contracting 8,494 6,884Payroll 23,293 18,809Matchmaking 208,920 147,078MSP 49,602 -Additional services 5,225 4,594Total 295,534 177,365

Cost of salesCost of sales comprises the purchasing costs for matchmaking, including wages/salaries and temporary hiring of third parties, for which HeadFirst acts as ‘principal’ and which are allocated to the financial year in which the associated revenue is recognised.


Gross invoice valueThe gross invoice value relates to the amounts invoiced to customers of HeadFirst for services provided, regardless of whether it acts as agent or principal. In view of the required insight, presentation at the top of the income statement has been preferred. This information as well as the developments relating to it are essential in assessing the changes in the balances of trade receivables and trade payables. It is also customary in the sector to state the gross invoice value.

4 Employee benefits

(x € 1,000) 2019 2018

Wages and salaries 28,734 22,663Less: Staffing costs under cost of sales 20,332 17,220Subtotal for internal staff 8,402 5,413

Social security contributions 1,312 748Pension costs 412 204Other staffing costs 1,967 1,118Total employee benefits 12,093 7,483

Staffing costs relate almost entirely to short-term employee benefits. The pension plan is a defined contribution plan. The pension contributions paid are charged to profit or loss.

EmployeesAs at 31 December 2019, the total number of employees was 146 (2018: 147), sub-classified as follows.• Direct/sales staff: 69 (2018: 68), of which in Belgium: 2 (2018: 2)• Support: 69 (2018: 71), of which in Belgium: 4 (2018: 3)• Management: 8 (2018: 8)

External staffAs at 31 December 2019, the number of staff reported under revenue was 190 (2018: 316).

5 Other operating costs

(x € 1,000) 2019 2018

Accommodation costs 236 611Selling expenses 807 660Car expenses 363 609Office expenses 260 578General expenses 1,953 2,044Total 3,619 4,502

Auditor’s fees

(x € 1,000) 2019 2018

Audit of the financial statements 163 171Additional audit fees 10 16Other auditor's fees 6 10Total 179 197

The fees for the audit of the financial statements comprise the total fees for the financial year to which the financial statements relate, regardless of whether the procedures were already performed by the external auditor during the financial year. As from the financial year 2017, Accon avm controlepraktijk B.V. has served as the auditor.

The other operating costs include no significant amounts for short-term leases and leases of assets with a low market value.


6 Financial income and expenses

(x € 1,000) 2019 2018

Financial incomeInterest on loan to Beryllium 3,582 997Other - 15Total 3,582 1,012

Financial expensesInterest expenses on financial liabilities at amortised cost:• Factorline - (387)• Bank charges (55) (293)• Mortgage loan (9) (35)• Other non-current liabilities (2,213) (1,416)Exchange differences (19) (5)Amortisation and other movements in value - (425)Costs of sales of accounts receivable (7,830) (2,440)Other (255) (979)Total (10,381) (5,980)

The costs of sales of accounts receivable relate to financial expenses resulting from the financing with TH ruvercap (Pimco) (see Note 15).

7 Income taxes

‘Income taxes’ comprise the following items:

(x € 1,000) 2019 2018

Current income tax expenseCurrent year (187) 196Release of provision for deferred taxation (451) (344)Prior-year adjustments relating to current income taxes - (4)Total (638) (152)

Reconciliation between the nominal tax rate and the effective tax rate:

(x € 1,000) 2019 2018

Result before income tax 1,998 956Amount of tax based on applicable nominal rates of 24.4% and 20.4%, respectively (488) (195)

Effects of permanent differences:• Non-deductible amortisation of intangible assets (€ 2,084) (508) (420)• Difference in rates between Netherlands/Belgium/Luxembourg (49) (15)Other differences (315) 478Actual tax amount (638) (152)Effective tax rate 31.9% 15.9%

The calculation of the income taxes item is based on the tax burden that will actually be levied at the companies where it is charged to profit or loss.

The applicable tax burden for 2019 is the same as for 2018 on the results for tax purposes. HeadFirst Source Holding B.V. forms a fiscal unity with the entities of Source+ N.V. (as from 1 July 2014), with the entities of HeadFirst Group Beheer (as from 29 December 2017) and with the entities of Proud (as from 12 May 2017).

Myler Holding B.V. has been part of the fiscal unity as from the acquisition date, while Beryllium B.V. has likewise been consolidated and is the new head of the fiscal unity as from 1 January.

The profits of the companies that form a fiscal unity can be set off against tax loss carry forwards.


8 Other comprehensive income

There was no ‘Other comprehensive income’ in 2019 and 2018.

9 Profit appropriation and dividend

Pending the approval of the financial statements by the general meeting, the profit for 2019 of € 1,362,000 (2018: € 804,000) has been accounted for within equity and is at the disposal of the shareholders to be added in whole or in part to the other reserves or to be distributed in whole or in part.

No dividend distributions were made to the shareholders of the company in 2019.

A dividend of € 2,027,000, or € 11 per issued share, was distributed to the shareholders of the company in 2018.

10 Intangible assets

The intangible assets comprise capitalised goodwill on the acquisition of HeadFirst Houdstermaatschappij B.V., Designated Professionals B.V., Proud Holding B.V., Myler Holding B.V. and Staffing MS Holding B.V. as well as the identifiable intangible assets on the acquisition of Source+ N.V., HeadFirst Houdstermaatschappij B.V., Designated Professionals B.V., Proud Holding B.V., Myler Holding B.V. and Staffing MS Holding B.V. as well as software.

The amortisation rates applied to the intangible assets are 10% for the customer base, 10% for the brand name and 10–20% for the capitalised software.

(x € 1,000) GoodwillCustomer database

Brand name Software Total

2019Cost 56,138 20,353 3,807 10,962 91,260Accumulated amortisation and impairment - 8,214 3,236 4,157 15,607Carrying amount as at 1 January 56,138 12,139 571 6,805 75,653

Reclassification 2,581 - - (2,581) -Investments - - - 1,397 1,397Amortisation - (1,703) (381) (606) (2,690)Acquisitions 428 - - - 428Disposals - - - (12) (12)Accumulated amortisation on disposals - - - 11 11Carrying amount as at 31 December 59,147 10,436 190 5,014 74,787

31 DecemberCost 59,147 20,353 3,807 9,766 93,073Accumulated amortisation and impairment - (9,917) (3,617) (4,752) (18,286)Carrying amount 59,147 10,436 190 5,014 74,787Remaining amortisation period - 118 mo. 18 mo. - -

Goodwill HeadFirst, Source, Proud, Myler en Staffing MS The activities of the acquisitions were integrated within HeadFirst as from 2017. As a result, the previously independent processes can no longer be separately tracked. They are considered to be a single cash-generating unit. Impairment testing is based on a calculation of value in use (DCF analysis). The cash flow forecasts are based on plausible and substantiated assumptions made by local management. Analytical reviews of realised margins and revenue developments were used in preparing the forecasts. The revenue forecasts were based on 2.25% year-on-year revenue growth compared with the 2020 budget. The margin to be achieved for the forecast years was based on historically achieved margins, less a margin. A projection period of 5 years was applied in the calculation of value in use.


The interest rate applied in the DCF analysis is 3.35% (2018: 3.87%) and consists of variable interest at 3.00% (2018: 3.00%) plus a risk premium of 0.35%* (2018: 0.87%). The risk premium is based on the average effective yield on 30-year German government bonds. A market risk premium of 6.00% (2018: 5.50%) and a company risk premium of 3.00% (2018: 3.00%) were applied in the DCF analysis to determine cost of equity. Based on the above input variables and the average equity ratio for the representative sector of HeadFirst, a WACC of 10.08% (2018: 10.20%) was applied.

Based on the analysis performed, no impairment had occurred.

For more information on the calculation of the goodwill item, see Note 1 Business combinations.

Sensitivity analysisImpairment testing is based on a calculation of value in use (DCF analysis), including specific input variables for revenue growth, WACC and gross margin. The sensitivities of those input variables are set out below. If the model had applied a lower revenue growth of one percentage point, a lower gross margin of one percentage point or a higher WACC of one percentage point, based on an unchanged cost structure and investment level, the space decreases by the following amounts, still without the disclosure of impairments:

(x € 1,000) Revenue growth -1% WACC +1%* Gross margin -0.1%

HeadFirst Group 11,913 17,007 9,462

* The risk premium used is based on 30-year German government bonds. If - instead of this historically low surcharge - an average surcharge of 1.5% would be used, based on the long-term average of risk-free effective interest rate, this would lead to an increase in the WACC by 1%.


Brand name Software Total

2018Cost 29,221 13,188 3,807 6,396 52,612Accumulated amortisation and impairment - 6,687 2,854 1,900 11,441Carrying amount as at 1 January 29,221 6,501 953 4,496 41,171

ReclassificationInvestments 26,917 7,165 - 556 34,638Amortisation cost - (1,527) (382) (726) (2,635)Acquisitions - - - 4,642 4,642Accumulated amortisation on acquisitions - - - (2,149) (2,149)Cost of disposals - - - (632) (632)Accumulated amortisation on disposals - - - 618 618Carrying amount as at 31 December 56,138 12,139 571 6,805 75,653

31 DecemberCost 56,138 20,353 3,807 10,962 91,260Accumulated amortisation and impairment - 8,214 3,236 4,157 15,607Carrying amount 56,138 12,139 571 6,805 75,653Remaining amortisation period - 118 mo. 18 mo. - -


11 Property, plant and equipment

The depreciation rates applied to property, plant and equipment are 4 –20% for buildings, or 20% for other property, plant and equipment.

(x € 1,000) BuildingsRight-

of-use Other Total

2019

1 January Cost 535 - 2,099 2,634Accumulated depreciation (227) - (1,354) (1,581)Total 308 - 745 1,053

MovementsInvestments 91 804 166 1,061Depreciation (87) (1,161) (227) (1,475)Impairment - (137) - (137)Implementation of IFRS 16 - 2,849 - 2,849Cost of disposals - - (258) (258)Accumulated amortisation on disposals - - 236 236Total 312 2,355 662 3,329

31 DecemberCost 626 3,653 2,007 6,286Accumulated depreciation (314) (1,298) (1,345) (2,957)Total 312 2,355 662 3,329

(x € 1,000) Buildings Other Total

2018

1 January Cost 218 1,352 1,570Accumulated depreciation (163) (973) (1,136)Total 55 379 434

MovementsInvestments 317 371 688Depreciation (64) (144) (208)Consolidation acquisition cost 663 663Consolidation of accumulated depreciation (396) (396)Disposals - (287) (287)Accumulated amortisation on disposals - 158 158Total 308 745 1,053

31 DecemberCost 535 2,099 2,634Accumulated depreciation (227) (1,354) (1,581)Total 308 745 1,053

The employees in the building of the subsidiary Myler in Utrecht relocated to Hoofddorp in 2019. The building in Utrecht therefore became vacant. As the lease ends on 1 April 2022, the right-of-use asset was written down by € 0.1 million. HeadFirst expects to sublet the property in 2020. The recoverable amount was determined on the basis of the value in use.


The following right-of-use assets are recognised in the balance sheet:

(x € 1,000) Buildings Cars Total

As at 1 January 2019 2,029 820 2,849 Additions 360 444 804 Depreciation and impairment (798) (500) (1,298) As at 31 December 2019 1,591 764 2,355

12 Financial assets

(x € 1,000) 2019 2018

Carrying amount as at 1 January 35,334 701Change in fair value of derivative - (425)Loans provided to Beryllium 5,727 34,910Other additions 280 148Carrying amount as at 31 December 41,341 35,334

The fair value does not differ materially from the carrying amount.

Loans provided to Beryllium B.V.On 24 August 2018, HeadFirst B.V., Oyster Coast B.V., Source Automation B.V. and Source Automation Belgium Bvba jointly provided loans to Beryllium B.V. of up to € 31 million for the acquisition of approximately 96.5% of the shares in Morefield Group N.V. (formerly HeadFirst Source Group N.V.). The agreed interest rate is 9% per annum. This loan will be repaid after three years at the latest.

On 2 October 2018, Myler Holding B.V. provided a loan of € 0.5 million to Beryllium B.V. The agreed interest rate is 9% per annum. This loan will be repaid after three years at the latest.

On 31 December 2018, HeadFirst Source Holding B.V. provided a loan of € 3.4 million to Beryllium B.V. The agreed interest rate is 9% per annum. This loan will be repaid after three years at the latest. All Beryllium B.V.’s existing assets and assets to be acquired have been provided as security for those loans; the shares held by Beryllium in HeadFirst Source Holding B.V. are part of those assets.

An additional loan of € 5.7 million was provided in 2019. The agreed interest rate is 9% per annum. This loan will be repaid after three years at the latest. All Beryllium B.V.’s existing assets and assets to be acquired have been provided as security for those loans; the shares held by Beryllium in HeadFirst Source Holding B.V. are part of those assets.

These transactions can be summarised as follows:

(x € 1,000) 31 December 2019 31 December 2018

HeadFirst B.V. 17,000 17,000Oyster Coast B.V. 5,000 5,000Source Automation B.V. 7,000 7,000Source Automation Belgium Bvba 2,000 2,000Myler Holding B.V. 500 500HeadFirst Source Holding B.V. 9,137 3,410Total 40,637 34,910


13 Deferred tax assets

(x € 1,000) 2019 2018

Carrying amount as at 1 January 1,004 259Acquisition of Staffing MS - 745Implementation of IFRS 16 75 -Movements during financial year (195) -Carrying amount as at 31 December 884 1,004

Of which:within 1 year - 17more than 1 year 884 987

As of 29 December 2016, the fiscal unity with HeadFirst Group Beheer B.V. as well as associated entities was applied for and granted. As a result, carryforward of tax losses (pre-consolidation losses) becomes less probable. Given these uncertainties, management decided not to recognise the tax losses as at year-end 2017.

The total amount of unrecognised tax losses was € 1.6 million. These tax losses available for carryforward expire as follows:

Year Tax loss Expires in

2011 333 20202012 881 20212013 397 2022Total 1,611

14 Financial instruments

Assets

(x € 1,000)Financial assets at

amortised cost

Financial assets at fair value

through profit or loss Total

2019Financial assets (Note 12) 41,341 - 41,341Trade and other receivables (Note 15) 61,825 - 61,825Subtotal 103,166 - 103,166Cash and cash equivalents (Note 16) 28,790 - 28,790Carrying amount as at 31 December 131,956 - 131,956


amortised cost

Financial assets at fair value

through profit or loss Total

2018Financial assets (Note 12) 35,334 - 35,334Trade and other receivables (Note 15) 65,590 - 65,590Subtotal 100,924 - 100,924Cash and cash equivalents (Note 16) 28,706 - 28,706Carrying amount as at 31 December 129,630 - 129,630

As the terms of the trade and other receivables are less than 12 months after the balance sheet date, the nominal value of these receivables will be virtually equal to amortised cost. The fair value does not differ materially from the carrying amount.


Liabilities

(x € 1,000)Liabilities at

amortised costLiabilities at fair value through profit or loss Total

2019Non-current liabilities (Notes 19, 21, 22, 23) 13,543 - 13,543Current portion of long-term loans (Note 24) 600 - 600Current liabilities (Note 24) 25,387 - 25,387Amounts owed to credit institutions 716 - 716Trade payables (Note 24) 95,816 - 95,816Other liabilities, accruals and deferred income (Note 24) 48,199 - 48,199Carrying amount as at 31 December 184,261 - 184,261



2018Non-current liabilities (Notes 19, 21, 22, 23) 11,332 - 11,332Current portion of long-term loans (Note 24) 2,403 - 2,403Current liabilities (Note 24) 18,754 - 18,754Amounts owed to credit institutions 1,060 - 1,060Trade payables (Note 24) 102,481 - 102,481Other liabilities, accruals and deferred income (Note 24) 48,520 - 48,520Carrying amount as at 31 December 184,550 - 184,550

15 Trade and other receivables

(x € 1,000) 2019 2018

Trade receivables 9,876 23,683Group companies -Subsidiaries 13,157 5,242Prepayments 3,277 1,086Other receivables, prepayments and accrued income 35,515 35,579Carrying amount as at 31 December 61,825 65,590

The trade receivables have a term of less than one year.

No external credit ratings are available for the debtors. The relatively large number of debtors ensures sufficient risk diversification, the debtors mainly comprise corporate clients.

Other receivables, prepayments and accrued income mainly comprise ‘unbilled revenue’ which had been substantially invoiced in full as at 1 February 2020 and had been received in full at the date of preparing the financial statements.

TH ruvercap (Pimco)On 28 August 2018, an agreement was concluded between HeadFirst B.V, Source Automation B.V., Source Automation Belgium Bvba, Oyster Coast B.V., Myler B.V. ( jointly referred to as

‘HeadFirst’) and TH ruvercap Cayman Ltd (Pimco). Under this agreement, HeadFirst sells 100% of the value of the accounts receivable outstanding to TH ruvercap (Pimco), subject to a number of conditions. Of that total, 90% is funded in advance and the remaining 10% is funded when the debtor effects payment. As a result, this remaining 10% is a short-term receivable in respect of TH ruvercap (Pimco) and is accounted for in other receivables.

The term of the agreement is 18 months. HeadFirst has been granted a credit facility of up to 90% of receivables sold to TH ruvercap (Pimco), with a maximum of € 105.6 million.The interest on an annual basis is 12-month Euribor with a 6% spread.


The ageing of the trade receivables of the continuing operations is as follows:

(x € 1,000) 2019 2018

Not past due 5,378 13,321Between 31 and 60 days 2,030 3,637Between 61 and 90 days 1,244 3,811Older than 90 days 1,224 2,934Total 9,876 23,703Provision for doubtful debts - (20)Carrying amount as at 31 December 9,876 23,683

Several customers apply a payment term of 90 days. The accounts receivable older than 90 days primarily relate to these customers. No provision was recognised for this purpose, as these receivables have largely been received. At the date of preparing the financial statements, virtually all items had been paid in full and the provision for doubtful debts was based on the creditworthiness of the debtors and the assessment of the individual items for the items still outstanding.

16 Cash and cash equivalents

(x € 1,000) 2019 2018

ABN Amro Bank 2,684 10,039Foreign currency account at ABN Amro Bank 808 172G Account at ABN Amro Bank 1,003 241Rabobank 18,609 14,921G Account at Rabobank 352 40ING 5,193 3,293Foreign currency account at ING 141 -Carrying amount as at 31 December 28,790 28,706

HeadFirst banks with ABN Amro, Rabobank and ING. These banks have A1 and Aa2 (Moody’s) ratings, respectively. The funds in the G Accounts are not at the free disposal of the company. The other cash and cash equivalents are at the free disposal of the company.

17 Assets held for sale

In 2017, the decision was taken to sell the property at Triosingel 37, Culemborg. Following the decision to sell the building, the building was classified as held for sale at the end of 2018 on the basis of IFRS 5.

On 31 December 2019, a contract of sale was concluded and executed by the civil-law notary in respect of the sale of the property in Culemborg. The sale resulted in a book loss of € 289,000. This book loss is classified in the financial statements under the depreciation of tangible fixed assets.

18 Equity

See Note 36 to the company financial statements for disclosures on equity.

19 Other liabilities

HeadFirst’s lease portfolio as at 31 December 2019 comprises fewer than 100 active lease contracts, mainly relating to property leases and vehicles. Approximately 91% of the value of the lease liability derives from land and buildings.

Contracts are negotiated on an individual basis and they contain a wide range of conditions, such as clauses for early termination and extension rights. They can contain both lease and non-lease components, in connection with which HeadFirst has elected not to include the service element in leases (e.g. fuel, insurance) in the right-of-use asset and the lease liability.

Termination clauses and extension rights are included in various property leases within HeadFirst. They are used to maximise operational flexibility in managing the assets that are used in the activities of HeadFirst. In determining the lease term, the management considers all facts and circumstances related to exercising an extension right or not exercising a termination clause. Both options are only included in the lease term if the lease is reasonably certain to be extended or not to be terminated.


Factors that are considered in terminating or extending leases include:• p enalties; • improvements in ground leases; • costs and disruptions of the processes at the substituted asset that is leased. Lease liabilities decrease as a consequence of payments and increase as a consequence of interest expenses, but they are also affected by lease modifications (e.g. extensions, early termination) and new leases. Extension options are only included in the lease liability if the group is reasonably certain to exercise its right; new leases are recognised on the commencement date. The lease liabilities may therefore vary over time, even if the number of leased assets does not change.

Movements in lease liabilities were as follows:

(x € 1,000) 2019

As at 1 January 2,849 Additions 804 Lease payments (1,238)Interest rate allocation 147 As at 31 December 2,563

The other liabilities consist of lease liabilities. The lease liabilities are subclassified into non-current and current as follows:

(x € 1,000) 31 December 2019

Non-current 1,437 Current 1,126 Total lease liabilities 2,563

20 Deferred tax liabilities

The deferred tax liabilities relate to the fair values attributed to the intangible assets as well as the property, plant and equipment on the acquisition of Source+ N.V., HeadFirst as well as Proud. The deferred taxation is calculated at 20%. These deferred tax liabilities can be broken down as follows:

(x € 1,000)

Fair value of brand name and

customer database

31 December 2018 2,655Movements through profit or loss (451)31 December 2019 2,204

21 Private loans

(x € 1,000) 2019 2018

Carrying amount as at 1 January 8,076 6,764Repayment of acquisition financing 1 with a nominal value of € 2,098 (The Niners B.V.), initial measurement at fair value - (2,204)Repayment of acquisition financing 2 with a nominal value of € 2,000 (HeadFirst Holding B.V.), initial measurement at fair value - (2,000)Loan from Niners B.V. with a nominal value of € 4,204, initial measurement at fair value - 3,974Deferred repayment of loan from Niners B.V. with a value of € 4,204 1,051 -Reclassification of acquisition financing 5 - 1,945Acquisition financing 5 55 -Reclassification of contingent liability - 1,000Classified as current (600) (1,403)Carrying amount as at 31 December 8,583 8,076


Loan payable - € 4,105,000 (The Niners B.V.)On 30 August 2018, The Niners B.V. provided a loan to HeadFirst Group Beheer B.V. of initially € 4,204,000, repayable in four equal annual instalments of € 1,051,000. The agreed interest is 5% annually for the first two years and 8% annually for the final two years. HeadFirst can proceed at any time to early repayment in full or in part, including the interest payable at that time, without incurring a penalty. This loan replaces acquisition financing 1 and 2 for the acquisition of HeadFirst on 29 December 2016. The loan was initially measured at fair value and subsequently at amortised cost. It was agreed in 2019 that the repayments for the years 2019 and 2020 will be deferred to 2021.

As at 31 December 2019, the fair value of the loan is € 4,086,000 (based on a market interest rate of 9%). The difference (€ 276,000) between the fair value on commencement and the nominal value is treated as a fair value change in equity and is accounted for as interest expense in profit or loss on the basis of the effective interest method during the term of the debt (2019: € 131,000 / 2018: € 46,000). A right of pledge on 5% of the shares of HeadFirst Source Holding B.V. has been provided as security.

Acquisition financing 3 - € 3.0 million (Value8 N.V.)Value8 N.V. provided a loan in connection with the acquisition of HeadFirst of initially € 3.0 million, repayable in five equal annual instalments of € 0.6 million. The agreed interest is nil and therefore not market-based. No subordination and no early repayment options were agreed, in connection with which a lower interest rate than the ‘12% loan’ referred to above could be expected. The estimated market interest rate is 7.5% at inception. The loan qualifies as a financial liability that is initially recognised at fair value and subsequently at amortised cost. The difference (€ 573,000) between the fair value on inception and the nominal value was recognised in 2016 as an adjustment of goodwill (transaction amount). The difference between the initial value and the principal amount will be amortised through profit or loss using the effective interest method (effectively, the interest rate applied is increased to the market interest rate). A net amount of € 0.6 million was accounted for as a current liability.

(x € 1,000)

Nominal value 3,000Initial recognition (fair value) as at 31 December 2016 2,427Carrying amount as at 31 December 2019 1,078Current 600Carrying amount as at 31 December 2019 478

The fair value was determined by discounting contractual cash flows using a market-based interest rate and the credit risk of the company, using market inputs. As at 31 December 2019, the fair value of the loan is € 1,069,000 (based on a market interest rate of 8%). No security was provided.

Acquisition financing 5 - € 3.0 millionIn 2018, the conversion option of the original convertible loan of € 2.0 million in connection with the acquisition of HeadFirst was cancelled and the contingent liability of € 1.0 million as at year-end 2017 was added to the loan. The term of the loan is three years. The agreed interest is 5% per annum, payable in arrears. HeadFirst can proceed at any time to early repayment in full or in part, including the interest payable at that time.

On initial recognition, the fair value of the loan was determined to be € 1,845,000 (based on a market interest rate of 8%). The difference (€ 155,000) between the fair value on inception (€ 1,845,000) and the nominal value (€ 2.0 million) will be amortised through profit or loss using the effective interest method. The initial measurement of the conversion option was discontinued due to the surrender of the conversion right, which has been accounted for as fair value change through profit or loss.

It was agreed in 2019 that the depreciation as at 31 December 2019 would be deferred to 2021.

On 26 June 2017, the loan was transferred by The Niners B.V., via assignment of the loan under unchanged conditions and in equal portions for each, to the following parties:• Approach B.V.• Courage Investments B.V.• Society Investments B.V.• Fixing Finance Investment B.V.• First Financial Management B.V.• Dutch Standard B.V.

As at 31 December 2019, the fair value of the loan was € 2,944,000 (based on a market interest rate of 7%). No security was provided.


Summary of long-term loans

(x € 1,000) 2019 2018

Nominal value

Carrying amount

Nominal value

Carrying amount

Third-party loan 1,000 1,000 1,000 1,000Acquisition financing 1 (subordinated) - - - -Acquisition financing 2 - - - -Refinancing of loans from The Niners 4,204 4,105 4,204 3,054Acquisition financing 3 3,000 478 3,000 1,078Acquisition financing 5 3,000 3,000 3,000 2,945Mortgage loan from ABN Amro Bank N.V. - - 601 601Total 11,204 8,583 11,805 8,678

The 2018 repayment of acquisition financing 3 (€ 0.6 million) has been accounted for as a current liability.

22 Convertable loans

(x € 1,000) 2019 2018

Carrying amount as at 1 January - 1,893Interest due to passage of time - 52Reclassification from/to private loans - (1,945)Carrying amount as at 31 December - -

23 Amounts owed to credit institutions

(x € 1,000) 2019 2018

Carrying amount as at 1 January 601 666Repayment (601) (65)Carrying amount as at 31 December - 601

In 2008, the subsidiary Source + N.V. entered into a mortgage loan with ABN Amro Bank N.V. to finance the office building located at Triosingel in Culemborg. The term of this mortgage loan was 20 years. In combination with an interest rate swap concluded, the fixed interest as at the balance sheet date is 4.47% per annum. The repayments are € 16,000 per quarter. The original amount of the loan was € 1.3 million. This loan was repaid in full as at 31 December 2019.

24 Current liabilities

(x € 1,000) 2019 2018

Trade payables 95,816 102,481Amounts owed to credit institutions 716 1,060Current part of loans 2,726 2,403TH ruvercap (Pimco) – purchase/sale of trade receivables 19,387 18,754Loan from Homebase 2,000 -Loan from Easterhill-II 4,000 -Taxes and social security contributions 4,680 5,043Other liabilities, accruals and deferred income 42,712 43,476Carrying amount as at 31 December 172,037 173,217

Credit agreement with ING - € 716,000On 13 September 2016, Staffing MS Holding B.V. and its subsidiaries entered into a current account credit agreement with ING Bank N.V. The maximum facility is € 800,000, of which € 716,000 was drawn as at 31 December. The agreement was entered into until 1 October 2017 and is tacitly renewed each year. The fee is 1-month Euribor plus a spread of 2.35%. If the 1-month Euribor rate is negative, it is deemed to be 0%. With a view to the nature of the agreement, this liability has been classified as current.


Financing TH ruvercap Cayman Ltd (Pimco)In the financial year 2018, HeadFirst B.V., Oyster Coast B.V., Source Automation B.V. , Source Automation Belgium Bvba as well as Myler Holding B.V. entered into an agreement for the purchase and sale of trade receivables with TH ruvercap Cayman Ltd (Pimco)., under which HeadFirst sells 100% of the approved trade receivables (not older than 90 days) in exchange for 90% immediate payment and the remainder (10%) on receipt of the payment of the full amount of the receivable. The maximum facility is € 105.5 million. The term of the agreement is 18 months. In addition to a handling fee (0.265%) and a transaction fee (1%), the fee comprises a commitment fee of 12-month Libor plus a spread of 6%. With a view to the nature of the agreement, this liability has been classified as current.

Current part of loans - € 2.7 millionThe second instalment of the purchase price for Staffing MS Holding (€ 1.0 million) is included in the short-term private loans item. The remainder of this item comprises the 2018 repayment of acquisition financing 3 (€ 0.6 million) and the current part of the lease obligations (€ 1.1 million).

25 Collaterals

Pledge of trade receivables and unbilled revenueIn 2018, loan agreements were concluded between Easterhill 1 B.V. and Beryllium B.V. (the 100% shareholder of HeadFirst Source Holding B.V.) As security, the unbilled revenue of HeadFirst B.V. and Oystercoast B.V. was pledged to Easterhill 1 B.V.

26 Off-balance sheet rights and obligations

Contingent liabilitiesObligations pursuant to vicarious tax liabilityPursuant to statutory provisions on vicarious tax liability, the company is jointly and severally liable for the payment of employee insurance contributions and national insurance contributions as well as of payroll and turnover tax when subcontracting work or hiring workers, respectively. The potential amount of the liability cannot be reliably estimated. No claims have been submitted to date with regard to this liability.

Bank guaranteesBank guarantees have been issued amounting to € 260,000.

Beryllium B.V. fiscal unityAs from 1 January 2019, the HeadFirst Source Holding B.V. fiscal unity for corporate income tax was consolidated with Beryllium B.V.

27 Cash flow statement

The cash flow statement has been prepared using the indirect method, for which purpose the movements in cash and cash equivalents are derived from the result after income tax.

In the cash flow statement of cash flows, cash and cash equivalents qualify as liquid assets.The impact of acquired activities on the 2018 cash flows of HeadFirst is presented partly below and partly in Note 1 Business combinations.

Trade and other receivables(x € 1,000) 2018

Carrying amount as at 31 December 65,590Acquisition of subsidiariesTrade receivables 8,806Financing from acquisition 28,147Other receivables 39,738Operating working capital from current assets as at 31 December (11,101)

Current liabilities(x € 1,000) 2018

Carrying amount as at 31 December 173,218Less:Current portion of non-current liabilities (2,468)Acquisition of subsidiariesTrade payables (45,597)Other liabilities, accruals and deferred income (24,789)Operating working capital from current liabilities as at 31 December 100,364


Investments in subsidiaries

(x € 1,000) 2018

Payment in cash (Note 1):Myler 28,147Staffing MS 1,674

Less:Cash and cash equivalents of Myler (1,030)Cash and cash equivalents of Staffing MS (2,281)Investments in subsidiaries (excluding liquidities purchased as part of the transaction) 26,510

28 Related-party transactions

Related-party transactions take place at conditions that are equivalent to conditions applying between independent parties.

The following are related parties of HeadFirst Source Holding B.V.: • Beryllium B.V.;• the subsidiaries;• the members of the Board of Directors;• The Niners B.V.

Related-party transactions

(x € 1,000) Transactions Balance at year end

2019 2018 2019 2018

Loan granted to Beryllium B.V. 31,500 31,500 31,500Interest on loan granted to Beryllium B.V. - 665 - 665Loan granted to Beryllium B.V. 5,727 3,410 9,137 3,410Recharged in current account Beryllium B.V. 8,407 4,300 12,707 4,300Refinancing of loans payable to The Niners B.V. - 4,204 (4,105) (3,974)Repayment of acquisition financing 1 – The Niners B.V. - 2,000 - -Repayment of acquisition financing 1 – The Niners B.V. - 2,204 - -Takeover of debt for acquisition financing 4 by Beryllium B.V. - 3,000 - (3,000)Provision of loan payable to Beryllium B.V. 1,271 13,161 (14,432) (13,161)Interest on refinancing of loans payable – The Niners B.V. 326 121 - -Interest on acquisition financing 1 – The Niners B.V. - 67 - -Interest on acquisition financing 2 – The Niners B.V. - 176 - -Interest on loan for acquisition financing 4 - The Niners B.V. - 233 - -

Remuneration of key management (operational management)The total remuneration for the key management (board of directors under the articles of association of Source Holding B.V.) in 2019 was € 960,000 (2018: € 1,004,000). The remuneration consists almost wholly of short-term employee benefits; an amount of € 76,000 relates to long-term employee benefits (pensions).

There are no post-employment benefits or share-based payments. All benefits and remuneration are based on short-term employee benefits.


29 Fair value

Financial instruments that are recognised at fair value can be subclassified into various levels on the basis of the information used to measure fair value. The group applies the following levels: • quoted prices in active markets for identical instruments; (level 1)• quoted prices for similar instruments or other valuation techniques for which significant

input factors are based on observable market data (such as swap prices, exchange rates); again, the markets are required to be active (observable inputs); (level 2)

• valuation techniques for which the significant input factors are based on unobservable market data (unobservable inputs). (level 3)

There were no shifts between levels 1 and 2 and/or valuation techniques during the year. HeadFirst accounts for changes between the levels during the year.

(x € 1,000) Note Carrying amount Fair value

Measurement at fair value

Loans and receivables

Other financial liabilities

Total

Level 1

Level 2

Level 3

Totaal

31 December 2019

Financial assets not at fair valueTrade and other receivables 15 - 61,528 - 61,528 - - - -Cash and cash equivalents 16 - 28,790 - 28,790 - - - -Loans 12 - 40,637 - 40,637 - 40,637 - 40,637

- 130,955 - 130,955 - 40,637 - 40,637

Financial liabilities not at fair valueFinancing of purchase/sale of accounts receivable 24 - - (19,387) (19,387) - - - -Mortgage loan 23 - - - - - - - -Private loans 21 - - (14,583) (14,583) - (14,583) - (14,583)Trade payables 24 - - (95,816) (95,816) - - - -

- - (129,786) (129,786) - (14,583) - (14,583)

The fair value of all short-term financial instruments is equal to amortised cost.


(x € 1,000) Note Carrying amount Fair value

Measurement at fair value

Loans and receivables

Other financial liabilities

Total

Level 1

Level 2

Level 3

Total

31 December 2018

Financial assets not at fair valueTrade and other receivables 15 - 65,590 - 65,590 - - - -Cash and cash equivalents 16 - 28,706 - 28,706 - - - -Loans 12 - 34,910 - 34,910 - 34,910 - 34,910

- 129,206 - 129,206 - 34,910 - 34,910

Financial liabilities not at fair valueFinancing of purchase/sale of accounts receivable 24 - - (18,754) (18,754) - - - -Mortgage loan 23 - - (601) (601) - (601) - (601)Private loans 21 - - (8,076) (8,076) - (21,237) - (21,237)Trade payables 24 - - (102,481) (102,481) - - - -

- - (129,912) (129,912) - (21,838) - (21,838)

The fair value of all short-term financial instruments is equal to amortised cost.

30 Events after balance sheet date

An important event after the balance sheet date of 31 December 2019 is of course the corona virus. This crisis is affecting the labour market, including the flexible labour market in which HeadFirst Group operates. We saw a rapid decline in the number of new hiring requests in March 2020. While we have seen a cautious positive trend in requests since May, the numbers have not yet returned to pre-coronavirus levels. The pandemic has also negatively affected the number of hours worked by the more than 10,000 professionals who work for clients through us. However, only a very small number of professionals have had their assignments formally terminated.

Overall, we can say that the impact of COVID-19 on our organization has remained limited up to now. There are a number of reasons for this situation:• The type of professionals for whom we act as an intermediary, mostly highly skilled

knowledge workers who often work on business-critical processes within organizations, can usually carry out their work for our clients remotely.

• We have a good, healthy distribution of clients in various sectors, including many government organizations that have continued to be stable employers of temporary staff.

• We do not employ any professionals whom we place on secondment, which makes us flexible. As we are capable of adapting our costs and budgets to market developments, we have done so.

• The coronavirus crisis is underpinning a number of trends which have been apparent for some time and which create opportunities for HeadFirst Group: the need for organizational flexibility (responding to market developments), control over the hiring of personnel (rapid upscaling and downscaling) and automation (location-specific work has proven vulnerable). The shortage in the market for highly skilled knowledge workers is also expected to continue, emphasising the need for the solutions that we offer.

In January 2020, the option to cancel the existing facility with TH ruvercap (Pimco) at the end of January 2020 was used. It has been replaced by a new facility with Pilatus Finance DAC. This facility has more favourable conditions for the company, which will positively contribute to the development of the group’s result and solvency.

Notes to the consolidated financial statements


Assets


Intangible assets 31 38,451 37,341Property, plant and equipment 32 - 67Financial assets 33 26,439 19,110Non-current assets 64,890 56,518

Subsidiaries 35 5,969 1,248Trade and other receivables 35 309 710Cash and cash equivalents 939 4,877Current assets 7,217 6,835

Total Assets 72,107 63,353

Liabilities


Share capital 18 18Loans qualified as equity 17,432 16,437Share premium reserve 6,592 6,500Other reserves 1,291 81Result for the year 1,362 804Equity 36 26,695 23,840

Other provisions 54 509Provisions 54 509

Deferred tax liabilities 1,270 1,787Non-current liabilities 1,270 1,787

Trade payables 142 133Short-term private loans 7,000 1,000Amounts owed to group companies 34,212 34,692Other current liabilities 2,734 1,392Current liabilities 37 44,088 37,217

Total Liabilities 72,107 63,353

Company balance sheet as at 31 December 2019before profit appropriation

Company financial statements


2019 Company income statement (x € 1,000) Note 2019 2018

Employee benefits 38 768 415Amortisation of intangible assets 31 1,471 1,294Depreciation of property, plant and equipment 32 67 50Other operating costs 39 (887) 75Total operating expenses (1,419) 1,834

Total operating result (1,419) (1,834)

Financial income 808 -Financial expenses (3,455) (1,365)Financial income and expenses 40 (2,647) (1,365)

Result before income tax (4,066) (3,199)

Income tax 975 677

Share of profit of subsidiaries 4,453 3,326

Result after income tax 1,362 804

Company financial statements


Notes to the 2019 company financial statementsHeadFirst Source Holding B.V. (Chamber of Commerce no. 27328208) has its registered office at Polarisavenue 33, 2132 JH Hoofddorp, the Netherlands. Until 19 December 2018, HeadFirst Source Holding B.V. was part of the listed company Morefield Group N.V. (formerly HeadFirst Source Group N.V.) As of that same date, the acquisition holding company Beryllium acquired 100% of the shares of HeadFirst Source Holding B.V.

For the description of the activities and the corporate structure, see the notes to the consolidated financial statements.

Accounting policiesThe company financial statements of HeadFirst Source Holding B.V. are prepared in accordance with the statutory provisions of Part 9 of Book 2 of the Dutch Civil Code. Use has been made for that purpose of the possibility provided by Section 362(8) of Book 2 of the Dutch Civil Code to apply the accounting policies (including the accounting policies for the presentation of financial instruments as equity or debt) that are used in the consolidated financial statements.

The consolidated financial statements are prepared in accordance with the International Financial Reporting Standards as adopted by the European Union. For a description of those accounting policies, see the accounting policies for the consolidated financial statements. The accounting policies for the company financial statements are the same as those for the consolidated financial statements. If no accounting policies are specified, reference is made to the accounting policies stated in the consolidated financial statements.

Participating interestsParticipating interests in group companies and other companies over which HeadFirst is able to exercise control or for which it provides the central management are recognised at net asset value. The change in equity is determined by measuring the assets, provisions as well as liabilities and calculating the profit or loss in accordance with the accounting policies that are applied in the consolidated financial statements.

Subsidiaries over which control can be exercised or for which HeadFirst Source provides the central management are recognised at net asset value. The net asset value is determined by measuring the assets, provisions as well as liabilities and calculating the profit or loss in accordance with the accounting policies that are applied in the consolidated financial statements. If the share in losses exceeds the carrying amount of the subsidiary, further losses are not recognised unless security has been provided on behalf of the subsidiary, or liabilities have been entered into or payments made on behalf of the subsidiary. In that case, a provision is recognised for such liabilities. Gains or losses on transactions with subsidiaries are eliminated in proportion to the interest in those subsidiaries to the extent that they were not realised by transactions with third parties. Losses are not eliminated if the transaction with a subsidiary shows that an asset is impaired.

There are no differences in 2019 between the result of HeadFirst as presented in the company income statement and the consolidated result.

Contents 74/ / HeadFirst Group 2019 Annual report / Notes to the company financial statements

31 Intangible assets

Intangible assets comprise the capitalised goodwill on the acquisition of Myler Holding B.V., Staffing MS Holding B.V. and Proud Holding B.V. (disclosures on business combinations in Note 1).

For more information, see the disclosures on the consolidated intangible assets in Note 10.


Brand name Total

2019Cost 29,393 14,326 3,807 47,526Amortisation - (6,949) (3,236) (10,185)Carrying amount as at 1 January 29,393 7,377 571 37,431

Investments 2,581 - - 2,581Amortisation - (1,090) (381) (1,471)Carrying amount as at 31 December 31,974 6,287 190 38,451

31 DecemberCost 31,974 14,326 3,807 50,107Accumulated amortisation - (8,039) (3,617) (11,656)Carrying amount 31,974 6,287 190 38,451


Brand name Total

2018Cost 2,477 7,160 3,807 13,444Amortisation - (6,036) (2,855) (8,891)Carrying amount as at 1 January 2,477 1,124 952 4,553

Investments 26,916 7,166 - 34,082Amortisation - (913) (381) (1,294)Carrying amount as at 31 December 29,393 7,377 571 37,341

31 DecemberCost 29,393 14,326 3,807 47,526Accumulated amortisation - (6,949) (3,236) (10,185)Carrying amount 29,393 7,377 571 37,341

32 Property, plant and equipment

(x € 1,000) 2019 2018

Carrying amount as at 1 January 67 117Remeasurement for 2018 - (50)Sale of property (67) -Carrying amount as at 31 December - 67

Property, plant and equipment comprise the carrying amount of the remeasurement of the property in Culemborg. In 2018, the property was written down on the basis of a valuation report that had been prepared. The property was sold at the end of 2019.


33 Financial assets

(x € 1,000) 31 December 2018 ReclassificationPaid-in

share premium Other movementsResult after income tax 31 December 2019

2019

SubsidiariesHeadFirst Group Beheer B.V. 683 276 91 74 817 1,941Source + N.V. 13,945 - - - 351 14,296Proud Holding B.V. 348 - - - 4 352Staffing MS Holding B.V. (495) - - - 1,245 750

OtherLoans 3,410 - - 5,690 - 9,100Fair value changes of loans 276 (276) - - - -Total 18,167 - 91 5,764 2,417 26,439

(x € 1,000) 31 December 2017Disposals/

InvestmentsPaid-in

share premium Other movementsResult after income tax 31 December 2018

2018

SubsidiariesHeadFirst Group Beheer B.V. 1,069 - - - (386) 683Source + N.V. 13,489 - - - 456 13,945Proud Holding B.V. 299 - - - 49 348Myler Holding B.V. - 312 - - 136 448

OtherLoans - - - 3,410 - 3,410Fair value changes of loans - - - 276 - 276Total 14,857 312 - 3,686 255 19,110


34 Financial instruments

Assets


amortised cost

Assets at fair value through profit

and loss Total

2019Financial assets (Note 33) 26,439 - 26,439Trade and other receivables (Note 35) 6,278 - 6,278Subtotal 32,717 - 32,717Cash and cash equivalents 939 - 939Carrying amount as at 31 December 33,656 - 33,656


amortised cost

Assets at fair value through profit

and loss Total

2018Financial assets (Note 33) 18,601 - 18,601Trade and other receivables (Note 35) 1,958 - 1,958Subtotal 20,559 - 20,559Cash and cash equivalents 4,877 - 4,877Carrying amount as at 31 December 25,436 - 25,436

As the terms of the trade and other receivables are less than 12 months after the balance sheet date, the nominal value of these receivables will be virtually equal to amortised cost. The fair value does not differ materially from the carrying amount.

Liabilities



2019Private loans (Notes 37, 38) 7,000 - 7,000Trade payables (Note 38) 142 - 142Amounts owed to group companies (Note 38) 34,212 - 34,212Other liabilities, accruals and deferred income (Note 38) 2,734 - 2,734Carrying amount as at 31 December 44,088 - 44,088



2018Private loans (Notes 37, 38) 1,000 - 1,000Trade payables (Note 38) 133 - 133Amounts owed to group companies (Note 38) 34,692 - 34,692Other liabilities, accruals and deferred income (Note 38) 1,392 - 1,392Carrying amount as at 31 December 37,217 - 37,217

For disclosures on the financial risks, see Note 3 to the consolidated financial statements.


35 Trade and other receivables

(x € 1,000) 2019 2018

Subsidiaries 5,969 1,248Other receivables 309 710Carrying amount as at 31 December 6,278 1,958

36 Equity

Issued capitalThe authorised capital of HeadFirst Source Holding B.V. amounts to € 90,000, divided into 900 shares of € 100 each, of which 180 shares have been issued.

Share premium reserveThe share premium reserve represents the premium paid in excess of the nominal value of the shares at the time of issuing new shares or exercising share options.

Other reservesEach year, the Management Board proposes to the General Meeting what part of the profit is to be distributed and what part is to be added to the other reserves. The undistributed part of the profit is at the disposal of the General Meeting of Shareholders and can be distributed as dividend.

Company statement of changes in equitybefore profit appropriation

(x € 1.000)

Issued and

paid-up capital

Share premium

reserve

Loans quali-

fying as equity

Other reserves

Result for the year Total

31 December 2017 18 6,500 1,342 567 1,541 9,968Profit appropriation - - - 1,541 (1,541) -Interim dividend - - - (2,027) - (2,027)Repayment - - (1,342) - - (1,342)Refinancing of loan - - 3,000 - - 3,000New loan - - 13,161 - - 13,161Other movements - - 276 - - 276Comprehensive income - - - - 804 804

31 December 2018 18 6,500 16,437 81 804 23,840Profit appropriation - - - 804 (804) -Reclassification - - (276) 276 - -Other movements - 92 - 130 - 222New loan - - 1,271 - - 1,271Comprehensive income - - - - 1,362 1,36231 December 2019 18 6,592 17,432 1,291 1,362 26,695

The sum of € 1,271,000 included under new loans in the 2019 financial statements relates to the interest owed on the loans recognised in equity.


Acquisition financing - € 3.0 million (Beryllium B.V.)On 30 August 2018, The Niners B.V. assigned acquisition financing 4 (€ 3.0 million) to Beryllium B.V, in connection with which the conditions of the loan were modified, as a result of which this loan qualifies as equity:• There is no contractual obligation for repayment, as HeadFirst has the right but not the

obligation to repay the loan and can defer repayment indefinitely.• The loan solely becomes repayable on demand in case of liquidation.• The condition for early repayment (sale of HeadFirst in full or in part) may occur in rare

situations but it is not probable that this will take place and this will be done solely on the initiative of HeadFirst (in control of the company).

Loan - € 14,432,000 (Beryllium B.V.)On 31 December 2018, Beryllium B.V. provided a loan to HeadFirst Source Holding B.V., in connection with which the conditions of the loan were formulated such that this loan qualifies as equity:• There is no contractual obligation for repayment, as HeadFirst has the right but not the

obligation to repay the loan and can defer repayment indefinitely;• The loan solely becomes repayable on demand in case of liquidation;• The condition for early repayment (sale of HeadFirst in full or in part) may occur in rare

situations but it is not probable that this will take place and this will be done solely on the initiative of HeadFirst (in control of the company).

37 Current liabilities

(x € 1,000) 2019 2018

Suppliers 142 133Short-term private loans 7,000 1,000Amounts owed to group companies 33,736 34,692Other liabilities, accruals and deferred income 2,734 1,392Carrying amount as at 31 December 43,612 37,217

Short-term private loansThis item comprises the second instalment for the purchase price of Staffing MS Holding (€ 1.0 million).

38 Employees

The number of employees during the financial year was three (2018: two).

39 Other operating costs

(x € 1,000) 2019 2018

Accommodation costs - -Selling expenses - 1Car expenses - 28Office expenses 1 69General expenses 698 565Recharging of management fee (1,586) (588)Total (888) 75

Exceptional/non-recurrent costsThe general expenses mainly comprise costs for consultancy services, audit services and integration.

40 Collaterals

For disclosures, see Note 25 to the consolidated financial statements.

Hoofddorp, 30 July 2020HeadFirst Source Holding B.V.

G.J. Schellingerhout M. KorenvaarChief Executive Officer (CEO) Chief Financial Officer (CFO)


Other informationArticles of Association provisions governing profit appropriation

Article 11.1 – Profit and distribution1. The general meeting of shareholders is authorised to appropriate the profit determined

through the adoption of the financial statements and to establish its distribution, insofar as the equity exceeds the reserves required to be held pursuant to the law or the articles of association.

2. A resolution to distribute will not have any consequences until such time as the management has given its approval. The management will only refuse to give approval if it is aware or should reasonably have been able to anticipate that the company will not be able to continue to pay its due debts after the distribution.

3. In calculating profit appropriation, the shares which the company holds in its own capital or for which it holds depositary receipts will be disregarded.

Proposed profit appropriation

The Board of Directors proposes to transfer the profit for the financial year to the other reserves.


Independent auditor’s report

To: the General Meeting of HeadFirst Source Holding B.V.

Report on the audit of the financial statements 2019 included in the annual reportOur opinionWe have audited the financial statements 2019 of HeadFirst Source Holding B.V. based in Hoofddorp.

In our opinion:• the accompanying consolidated financial statements give a true and fair view of the

financial position of HeadFirst Source Holding B.V. as at 31 December 2019 and of its result and its cash flows for 2019 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.

• the accompanying company financial statements give a true and fair view of the financial position of HeadFirst Source Holding B.V. as at 31 December 2019, and of its result for 2019 in accordance with Part 9 of Book 2 of the Dutch Civil Code.

The consolidated financial statements comprise:1. the consolidated balance sheet as at 31 December 2019; 2. the following statements for 2019: the consolidated statements of comprehensive income

and changes in equity and the consolidated cash flow statement; and3. the notes comprising a summary of the significant accounting policies and other

explanatory information.

The company financial statements comprise:1. the balance sheet as at 31 December 2019; 2. the 2019 income statement; and3. the notes comprising a summary of the accounting policies and other explanatory

information.

Basis for our opinionWe conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the ‘Our responsibilities for the audit of the financial statements’ section of our report.

We are independent of HeadFirst Source Holding B.V. in accordance with the Wet toezicht accountantsorganisaties (Wta, Audit firms supervision act), the Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore we have complied with the Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics).

We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis on the impact of the coronavirus COVID-19 on the companyWe draw attention to the paragraph ‘Events after balance sheet date’ in the notes to the financial statements which describes the impact of the coronavirus COVID-19 on the company after the date of the financial statements. Our opinion is not modified in respect of this matter.

Report on the other information included in the annual reportIn addition to the financial statements and our auditor’s report thereon, the annual report contains other information that consists of:• the management report;• other information as required by Part 9 of Book 2 of the Dutch Civil Code.

Based on the following procedures performed, we conclude that the other information:• is consistent with the financial statements and does not contain material misstatements;• contains the information as required by Part 9 of Book 2 of the Dutch Civil Code.

We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements.

By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scope of the procedures performed is substantially less than the scope of those performed in our audit of the financial statements.

Management is responsible for the preparation of the other information, including the management report in accordance with Part 9 of Book 2 of the Dutch Civil Code and other information as required by Part 9 of Book 2 of the Dutch Civil Code.

Other information


Description of responsibilities regarding the financial statementsResponsibilities of management for the financial statementsManagement is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS and with Part 9 of Book 2 of the Dutch Civil Code. Furthermore, management is responsible for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

As part of the preparation of the financial statements, management is responsible for assessing the company’s ability to continue as a going concern. Based on the financial reporting framework mentioned, management should prepare the financial statements using the going concern basis of accounting, unless management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.

Management should disclose events and circumstances that may cast significant doubt on the company’s ability to continue as a going concern in the financial statements.

Our responsibilities for the audit of the financial statementsOur objective is to plan and perform the audit engagement in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion.

Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors and fraud during our audit.

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. The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.

For a more detailed description of our responsibilities, we refer to the appendix of this auditor’s report.

Zaltbommel, July 30, 2020 accon avm controlepraktijk B.V. On behalf:

Signed on the original by: W.J. Warmerdam MSc RA

Other information


Appendix to our auditor’s report on the financial statements 2019 of HeadFirst Source Holding B.V.

In addition to what is included in our auditor’s report we have further set out in this appendix our responsibilities for the audit of the financial statements and explained what an audit involves.

We have exercised professional judgement and have maintained professional scepticism throughout the audit, in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit included among others:• identifying and assessing the risks of material misstatement of the financial statements,

whether due to fraud or error, designing and performing audit procedures responsive to those risks, and obtaining 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;

• obtaining 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;

• evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

• evaluating the subsequent events disclosure regarding the impact of the coronavirus COVID-19 on the company. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report;

• concluding on the appropriateness of management’s use of the going concern basis of accounting, and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a company to cease to continue as a going concern;

• evaluating the overall presentation, structure and content of the financial statements, including the disclosures;

• evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the group audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for group entities. Decisive were the size and/or the risk profile of the group entities or operations. On this basis, we selected group entities for which an audit or review had to be carried out on the complete set of financial information or specific items.

We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant findings in internal control that we identify during our audit.

Other information


Other information

Registered office of the companyPolarisavenue 33, Hoofddorp, the Netherlands

Visiting addressesHeadFirst Source MylerPolarisavenue 33 Polarisavenue 33 Polarisavenue 332132 JH Hoofddorp 2132 JH Hoofddorp 2132 JH HoofddorpThe Netherlands The Netherlands The Netherlands www.headfirst.nl www.source.eu www.myler.nlE. [email protected] E. [email protected] E. [email protected]. +31 (0)23-5685630 T. +31 (0)88-0183550 T. (020) – 820 8395

Staffing Management Services Source Belgium Source LuxemburgOostmaaslaan 71 J.E. Mommaertslaan 22/1 1, Côte d’Eich3063 AN Rotterdam B-1831 Diegem – België L-1450 LuxemburgThe Netherlands The Netherlands The Netherlands www.staffingms.com www.source.eu www.source.eu E. [email protected] E. [email protected] E. [email protected] T. +31 (0)10-7600900 T. +32 (0) 27217545 T. +35 (0) 22848781088

AuditorAccon AvmOude Bosscheweg 55301 LA ZaltbommelThe Netherlands

Text and editingHeadFirst Group

Design and layoutCF Report

TranslationMetamorfose Vertalingen

Project managementReport Company

Questions or commentsIf you have any questions about or comments on this annual report, please do not hesitate to contact us by email: [email protected].

© 2020 | HeadFirst Group

This annual report 2019 was written in the Dutch language and translated into English. In the event of any discrepancies between the English translation and the original Dutch version, the latter will prevail.


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2019 annual report - headfirst group

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