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Annual Report 2010

E_Ade

France 27%

North America 22%

UK & Ireland 3%

Japan 9%

Germany & Austria 10%

Benelux 5%

Italy 5%

Iberia 3%

Nordics 5%

Australia & New Zealand 1%

Switzerland 5%

Emerging Markets 5%

Key figures

Over 32,000 full-time-equivalent employees

Over 700,000 associates on assignment daily

Over 100,000 clients every day

Over 5,500 offices in more than 60 countries and territories

Revenues

in EUR billionsEBITA in EUR millionsNet income attributable to Adecco shareholders in EUR millionsEmployees FTE (year-end) in thousands

2010 Revenue split by business linesin%2010 Revenue split by geographyin %

France 30%

North America 19%

UK & Ireland 9%

Japan 7%

Germany & Austria 7%

Benelux 5%

Italy 4%

Iberia 4%

Nordics 4%

Australia & New Zealand 2%

Switzerland 2%

Emerging Markets 7%

2010 EBITA split by geographyin %

(operating units)

20.4 21.1 20.0 14.8 18.7828 1,081 908 299 722611 735 495 8 423 35 37 34 28 32

06 07 08 09 10 06 07 08 09 10 06 07 08 09 10 06 07 08 09 10

Office 20%

Industrial 48%

Information Technology 11%

Engineering & Technical 5%

Finance & Legal 4%

Medical & Science 2%

Sales, Marketing & Events 2%

Human Capital Solutions 1%

Emerging Markets 7%

for the years in EUR million (except shares)2010 2009 2008 2007 2006

Statement of operations data

Revenues 18,656 14,797 19,965 21,090 20,417

Gross profit 3,329 2,649 3,673 3,927 3,546

EBITA 2

722 299 908 1,081 828

Net income attributable to Adecco shareholders 423 8 495 735 611

Other financial indicators

Cash flow from operating activities 455 477 1,054 1,062 747

Free cash flow

3

350 385 948 971 662

Net debt

4

751 110 617 866 556

Key ratios (as % of revenues)

Gross margin 17.8% 17.9% 18.4% 18.6% 17.4%

SG&A ratio

5

14.0% 15.9% 13.8% 13.5% 13.3%

EBITA margin 3.9% 2.0% 4.5% 5.1% 4.1%

Per share figures

Basic EPS in EUR 2.20 0.04 2.82 3.97 3.28

Diluted EPS in EUR 2.17 0.04 2.71 3.80 3.14

Cash dividend in CHF 1.10

6

0.75 1.50 1.50 1.20

Number of shares

Basic weighted-average shares 192,113,079 177,606,816 175,414,832 185,107,346 186,343,724 Diluted weighted-average shares 195,596,325 177,613,991 184,859,650 195,279,053 196,532,960 Outstanding (year-end) 174,702,026 174,079,431 174,188,402 182,647,293 184,836,462

Tickers

SWX Europe ADEN

Bloomberg ADEN VX

Reuters ADEN.VX

ISIN CH0012138605Share pricein CHF

•Year-end 61.25

•Average 56.46

•High/low 66.15/46.22

Historical data

1 SMI and Basket of competitors (Manpower, Randstad and Kelly Services market capitalisation weighted in CHF) relative to Adecco"s share price: 1.1.2010 = CHF 57.05.

2 EBITA is a non-U.S. GAAP measure and is defined herein as operating income before amortisation and impairment of goodwill and intangible assets.

3 Free cash flow is a non-U.S. GAAP measure and is defined herein as cash flow from operating activities minus capital expenditures.

4 Net debt is a non-U.S. GAAP measure and comprises short-term and long-term debt, less cash and cash equivalents and short-term investments.

5 Excluding amortisation of intangible assets and impairment of goodwill and intangible assets.

6 Proposed by the Board of Directors.

Share price performance comparison 2010

in CHF

Basket of competitors

1

AdeccoSMI

1 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

506070

40

Share information

Contents

Company Report

6 Letter from Chairman & CEO

10 Interview with the CEO

17 Our business, strategy and KPIs

27 Market overview

35 Business review

51 Risk management

54 Brand management

59 Our people - our strength

67 Our corporate responsibility

75 Share information

Financial Review Adecco Group

92 Operating and financial review and prospects

111 Selected financial information

112 Consolidated financial statements

158 Report of the Statutory Auditor on the Consolidated Financial Statements

Financial Review Adecco S.A. (Holding Company)

160 Financial statements

173 Proposed appropriation of available earnings

174 Report of the Statutory Auditor on the Financial Statements

176 Major consolidated subsidiaries

Corporate Governance

178 Applicable Corporate Governance standards

178 Structure, shareholders, and capital

186 Board of Directors, Executive Committee, and compensation

199 Further information

Remuneration Report

204 Remuneration principles

207 Details of compensation elements

216 Glossary

We inspire individuals and organisations to work more effectively and group-abusiness that has a positive impact on millions of people everyday-weareconsciousofourglobalrole.

The Adecco Group

Dear shareholder,

In a year of generally improved economic conditions, the Adecco Group achieved strong results and profited from previous measures to structurally optimise the business. We are proud to report solid profitable growth and an industry leading performance. The value of flexibility in Human Resources has increased in the recent downturn and is becoming an essential part of our customers" competitiveness. Equally, individuals increasingly value a partner in the quest for on-going employment, rewarding work and careers. Demand for our services recovered strongly throughout 2010. Our revenues increased by 26% (12% organically 1 ) to EUR 18,656 million. Thanks to our price discipline and the support of the higher-margin Professional Staffing acquisition of MPS Group, included in our results as of February, 2010, we achieved a gross margin of 17.8%. The combination of solid top-line growth, strict price discipline and tight cost control, resulted in strong operational leverage.

Consequently, our EBITA

1 rose to EUR 722 million, an increase of 142% or 34% adjusted 1 and organically. The EBITA margin increased to 3.9%, from 2.0% in the prior year. Operating income amounted to EUR 667 million and net income attributable to Adecco shareholders was EUR 423 million. We generated operating cash flow of EUR 455 million, a good result when considering the increased working capital needs to fund the strong growth in revenues. In the light of this solid performance and the sound financial position, the Board of Directors proposes an increased dividend of CHF 1.10 per share for 2010.

1 Please refer to page 36 for an explanation of the terms organic, EBITA and adjusted.

7Adecco Group Company Report 2010

The 2010 results reflect a Group-wide commitment to a clear strategy geared towards achieving our mid-term EBITA margin target of above 5.5%. Our increased exposure to Professional Staffing, the leaner branch network and optimised delivery channels are paying off. The integration of MPS Group progressed well during the course of 2010 and the business performed above our initial expectations, both in terms of revenues and profitability. We are well on track to complete the integration in 2011 and will even exceed the initially targeted synergies of EUR 25 million. The integration of Spring Group, which we acquired in October

2009, was successfully completed at year end 2010 and the targeted synergies of EUR 13 mil-

lion were slightly exceeded. We also strengthened our operations in important Emerging Markets. In India we crossed the threshold of providing more than 100,000 associates with work on a daily basis. In China, we established a joint venture with Beijing Foreign Enterprise Human Resources Service Co. Ltd (FESCO), one of the leading HR service companies in a market with huge growth potential. The Shanghai-based joint venture, FESCO Adecco, operational since January 2011, already has over 100,000 associates on assignment every day and gives us access to a network of more than 100 branches throughout China with an established local and multinational client base.

Chairman of the Board of Directors

Patrick De Maeseneire

Chief Executive Officer

8 Adecco Group Company Report 2010

Most notably our strategic commitment to a distinct dual market approach in General Staffing and Professional Staffing is proving rewarding. The acquisition of MPS Group made us the worldwide leader in Professional Staffing. On the other hand, our General Staffing business showed strong performance, especially the industrial segment with revenues growing 22% in 2010. We will continue to develop our General Staffing business in 2011, maintaining cost leadership and optimising the delivery models. At the same time, we now have a solid platform to further grow the Professional Staffing business also on an organic basis. Our focus on value creation through the systematic application of the EVA concept within the Adecco Group remains a key strategic pillar and should enable us to continue delivering strong cash flows in the future. Continued commitment to our strategy will pay off in a market set for significant growth. The downturn instigated a structural shift towards temporary staffing in office, industrial and professional segments and proved the value of a more flexible workforce. Companies with a higher share of temporary employees were better able to respond to the sudden drop in demand. We believe that penetration of temporary staffing will increase and reach new peaks in many mature and emerging markets. HR flexibility is becoming pivotal, not least in the manufacturing sector where a more 'made to order" low inventory level has become prevalent. Also, on-going regulatory changes, such as the opening of the construction, the healthcare and public sectors to temporary work in Spain, create growth opportunities. Above all, in mature markets with ageing populations and mismatches between education systems and labour markets, skills shortages will become commonplace, despite high unemployment.

9Adecco Group Company Report 2010

As a Group we are united behind our strategy. We have six strategic priorities to ensureour continued profitable progress: improving retention of talents; continuing to invest in standard- ising IT systems to improve efficiency and operational effectiveness; strengthening our lead in the higher-growth Professional Staffing segment; further segmenting our General Staffing business with specialised delivery models addressing different skill groups; strengthening the lead in Managed Services Provider and Recruitment Process Outsourcing services; and enhancing our leading market development in the Emerging Markets that have enormous growth potential. We are a disciplined, growth-oriented Group with a strong focus on profitability that is well positioned for the future. And we are on course to achieve a mid-term EBITA margin of above 5.5%. Thank you to every employee for their continued commitment, to you, our shareholders for your loyalty, and to all of our valued clients and associates for their trust in the Adecco Group. Chairman of the Board of Directors Chief Executive Officer

10 Adecco Group Company Report 2010

Reaching new peaks

Interview with Patrick De Maeseneire, CEO

The six mid-term strategic priorities for the

Group were launched a year ago. Can you give us

an update? "We made good progress on all six. Retaining our talents as the economy further picks up will be key for the whole Adecco Group. Investments in IT were accelerated in 2010 and we continue to invest in 2011.

With the acquisition of MPS Group, we became the

world leader in Professional Staffing. The increasing trend of globally active companies to outsource HR processes, resulted in several contract wins for us in the Managed Services Provider/Recruitment Process Outsourcing space. And finally, we will further opti- mise the segmentation within our General Staffing business, as well as enhance our leading position in

Emerging Markets."

Adecco reported a strong performance for 2010.

When will you reach the mid-term EBITA margin

target of above 5.5%? "We have used the downturn to sharpen up for the future. We took advantage of the economic crisis in terms of M&A and invested in Professional Staffing.

With the structural measures taken to improve the

business and with the higher exposure to Professional Staffing, we are very well positioned to take advantage of the economic upswing and to further strengthen our leading market position in both General and

Professional Staffing. We achieved solid revenue

growth in 2010, and with price discipline and tight cost management, operational leverage was very good. We do not speculate on when we will reach this goal but we are fully committed to reaching our EBITA margin target in the mid-term." You have chosen your team; the six strategic priorities and the mid-term target are aligned with the Board of Directors. What"s next? "I have a broader Executive Committee so that all of

Adecco"s markets are represented.

This enhances the

successful execution of the Group"s strategy. Together we have more than 100 years of staffing industry ex- perience. It"s a great team to work with and our task now is to further implement our strategy and to reach our mid-term target."

What trends are you observing for 2011?

"We see a clear trend in that large global companies increasingly outsource the management of part or all of their contingent workforce spend to a Managed Services Provider (MSP). We observe the same trend for the management of permanent employees, where companies outsource all or part of their HR functions as Recruitment Process Outsourcing (RPO). The aim is to reduce the number of suppliers and to optimise the workforce spend."

11Adecco Group Company Report 2010

And how is Adecco positioned to take advantage

of this trend? "At Adecco, not only do we have a comprehensive MSP/RPO service offering but we also possess a lead- ing Vendor Management System (VMS), called Beeline. The VMS is used to manage the contingent workforce spend for a given customer, and offers remarkable transparency on candidates and suppliers."

In what ways and to what extent has the latest

economic downturn spread the concept of temporary work? Do you expect to surpass prior peaks in terms of penetration rates? "The recent downturn has proven the value of a more flexible workforce. Simply put, companies with a higher share of temporary employees were better able to respond to the sudden drop in demand. There is ample evidence of more just-in-time production these days, in order to maintain low inventory levels. This also results in an increased need of companies for flexible staffing levels. The declining inventory to sales ratio in the last decade, as witnessed across multiple sectors in the US, is evidence of this trend and we expect this to continue to drive demand for our servic- es. This, together with further deregulation, socio- demographic changes and the move of production to the east will in our view lead to new peaks in the penetration rates in many countries."How do you see the regulatory environment changing in the next few years; will doors open or close for the industry and why? "Generally speaking, more flexible labour markets lead to higher penetration rates for temporary staffing. In the EU countries, the Agency Work Directive effective as of December 2011, foresees the lifting of all restrictions related to temporary work. The most recent liberali- sation happened in Spain during 2010, where the con- struction, the healthcare and the public sectors are now open for temporary staffing. In France, the public sector was opened up to temporary staffing during 2009."

Besides the Professional Staffing business, do

you also see opportunities for profitable growth in

General Staffing?

"Absolutely, our clear focus is to further segment our offering in General Staffing. Tailoring our services towards either large or small customers is a keyquotesdbs_dbs7.pdfusesText_13

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