2. Summary of significant accounting policies

2.1 Basis of preparation

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all periods presented.
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and their interpretations issued by the International Accounting Standards Board (IASB), as adopted by the European Union (hereafter: IFRS).

New standards, amendments and interpretations to existing IFRS standards became effective in 2008. These new standards, amendments and interpretations, as far as they are relevant to the Group, have no impact on the valuation and classification of assets and liabilities of the Group.
New standards, amendments and interpretations to existing IFRS standards have been published that must be applied in accounting periods beginning on or after January 1, 2009. As far as these standards, amendments and interpretations are applicable to the Group, the Group has not opted for early adoption. New standards, amendments and interpretations are expected to have no impact on the valuation and classification of assets and liabilities of the Group.

The financial statements are prepared under the historical cost convention, unless otherwise stated in this summary of significant accounting policies.

For both current (expected to be recovered or settled within 1 year) and non-current (expected to be recovered or settled after 1 year) assets and liabilities, the corresponding presentation is used on the face of the balance sheet. Current assets and liabilities are not discounted.

The preparation of financial statements requires the Group to make certain judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenses. The actual outcome may differ from these judgments, estimates and assumptions.

Estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Information about significant areas of estimation, uncertainty and critical judgments made by management in applying accounting policies that could have a significant effect on the financial statements are disclosed in note 4.

With respect to the company income statement of Randstad Holding nv, the company makes use of the exception provided for in Article 402, Part 9, Book 2 of the Dutch Civil Code.

In these financial statements all amounts, unless otherwise stated, are presented in millions of euros.

2.2 Consolidation principles

The consolidated financial statements comprise the financial data of Randstad Holding nv and its subsidiaries.

Subsidiaries
Subsidiaries are companies where Randstad Holding nv has the power, directly or indirectly, to govern the financial and operational policies, generally accompanying a shareholding of more than 50% of the voting rights. Subsidiaries are consolidated from the date that control commences until the date that control ceases.

The Group uses the purchase method of accounting to account for the acquisition of subsidiaries. The consideration of an acquisition is measured as the fair value of the assets given and liabilities incurred or assumed at the date of acquisition, including directly attributable acquisition costs. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at their estimated fair value at the date of acquisition. The excess of the consideration of an acquisition over the fair value of the Group’s share of the net assets acquired is recorded as goodwill. If the consideration of an acquisition is less than the fair value of the net assets acquired, the difference (‘negative goodwill’) is recognized directly in the income statement.

Intragroup balances and intragroup transactions are eliminated, as well as any unrealized gains from these transactions. Unrealized losses from intragroup transactions are also eliminated unless there is evidence of impairment of the assets transferred.

See note 42 for an overview of the major subsidiaries.

Minority interests
Minority interests represent the position of net result and net assets not held by the Group and are presented separately in the income statement and within Group equity in the consolidated balance sheet, separately from shareholders’ equity. To the extent that a position of assets not held by the Group represents a negative net asset value, the Group does not allocate losses to minority interests.
Upon acquisitions of minority interests, the difference between the consideration and the book value of the share of the net assets acquired is recognized in goodwill.

Associates
Associates are companies where Randstad Holding nv has significant influence, but not control, over the financial and operational policies, generally accompanying a shareholding of between 20% and 50% of the voting rights.
Investments in associates are accounted for using the equity method and are initially recognized at cost. The Group’s investment in associates includes goodwill on acquisition, net of any accumulated impairment losses.

The Group’s share of the post-acquisition profits and losses of the associates is recognized in the income statement, and its share of post-acquisition movements in reserves is recognized in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate.
Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Results and other movements are based on the accounting policies adopted by the Group.

2.3 Foreign currencies

Functional and presentation currency
The Group operates in countries with different currencies. All companies have, as their functional currency, the local currency of the country in which they operate, which is their primary economic environment. The functional currency of the parent company, as well as of a major portion of its subsidiaries, is the euro. The presentation currency is the euro.

Transactions and balances in currencies other than the functional currency
Transactions in currencies other than the functional currency of the related company are converted at the foreign exchange rate at the date of the transaction.

Monetary balance sheet items in currencies other than the functional currency of the related company are converted at year-end exchange rates.
Exchange differences resulting from the settlement of such transactions, as well as from the conversion of monetary balance sheet items, are included in the income statement, except for exchange differences resulting from financial liabilities designated as a hedge of the net investment in a foreign operation; these are recognized directly in equity.
Exchange differences on cash and cash equivalents and borrowings are included in net finance costs. Exchange differences on other monetary balance sheet items are included in operating expenses.

Non-monetary balance sheet items that are measured in terms of historical cost in currencies other than the functional currency of the related company are converted at the foreign exchange rates at the date of transaction.
Non-monetary balance sheet items that are measured at fair value in currencies other than the functional currency of the related company are converted at the foreign exchange rates at the dates the fair values were determined.

Financial statements of Group companies
Upon translation of foreign activities, the assets and liabilities of operations in currencies other than the euro, including goodwill and fair value adjustments arising on consolidation, are translated to euros at the foreign exchange rates ruling as of the balance sheet date. The income statements of these operations in currencies other than the euro are translated to euros at average exchange rates.
Upon acquisition of a subsidiary that has a currency other than the euro, balance sheet items are translated to euros at the foreign exchange rates ruling at the acquisition date.

Net investment in subsidiaries that have a currency other than the euro
The net investment in subsidiaries that have a currency other than the euro includes the participation in the net assets of these subsidiaries, and, if applicable, loans to these subsidiaries, of which settlement is neither planned nor expected to occur in the foreseeable future.

Translation differences that occur upon consolidation, relating to the translation of the net investment in subsidiaries that have a currency other than the euro, are included in a separate component within shareholders’ equity, as well as translation differences of financial liabilities designated as hedges of such investments, to the extent that the hedge is effective. These translation differences are released or charged to the income statement as part of the gain or loss on disposal, whenever a foreign operation is disposed of.

The following main exchange rates to the euro apply for 2008 and 2007 (averages on annual basis):

	2008				2007
	Average		At year-end		Average		At year-end
Australian dollar	0.58		0.49		-		-
Canadian dollar	0.64		0.59		0.68		0.69
UK pound sterling	1.26		1.05		1.46		1.36
US dollar	0.68		0.71		0.73		0.68

Hedging activities
The Group is engaged in the hedging of net investments in foreign operations by designating financial liabilities as (net investment) hedges of such investments.
Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in equity. The gain or loss relating to the ineffective portion is recognized immediately in the income statement under net finance costs. Gains and losses accumulated under equity are included in the income statement when the foreign operation is disposed of.