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Switzerland — Adecco's constant currency Q3 revenues down by -28%

05 November 2009

Adecco SA (ADEN:VTX) announced today revenues down by -28%, in constant currency, from 5.1 billion Euro in Q3 2008 to 3.7 billion Euro in its interim results for Q3 2009.

Gross profit fell by -29%, in constant currency, from 917 million Euro in Q3 2008 to 658 million Euro in Q3 2009. Profit before tax fell by -52% from 231 million Euro in Q3 2008 to 109 million Euro in Q3 2009.

Revenues fell significantly in all European markets: French revenues declined by -27% to 1.3 billion Euro. In Germany revenues fell by -39% to 247 million Euro. In the UK and Ireland revenues fell by -28% to 228 million Euro.

In Italy revenues declined by -43% to 163 million Euro. Benelux was down by -18% to 204 million Euro. Scandinavia declined by -35% to 145 million Euro. Spain and Portugal were down by -33% to 183 million Euro and Switzerland and Austria accounted for 101 million Euro with an undisclosed growth rate.
On 20 October 2009, Adecco placed a 3-year CHF 900 million mandatory convertible bond with a coupon of 6.5%, issued by Adecco Investment (Bermuda) Ltd, a wholly-owned subsidiary of Adecco S.A. The net proceeds of the offering will increase Adecco's financial flexibility and strengthen its balance sheet in conjunction with the announced acquisition of MPS Group.

The reference share price and initial minimum conversion price of the bond will be CHF 50.50 and the initial maximum conversion price will be CHF 60.60 (120% of the reference share price). On that basis the number of shares underlying the bond upon issue will be approximately in the range of 14.85 million to 17.82 million shares.
The shares underlying the bond will be sourced from treasury shares and/or from conditional share capital of Adecco S.A, at Adecco’s election. Settlement of the bond is expected to occur on 26 November 2009. The bond is intended to be listed and admitted to trading on the SIX Swiss Exchange (ISIN XS0460347080).

Patrick De Maeseneire, Chief Executive Officer of the Adecco Group, said "market conditions have improved during the third quarter, especially in general staffing, and we have seen a gradual improvement of the revenue trend for the Adecco Group. Our efforts to structurally optimise our operations have led to a clearly lower SG&A base."
"The positive revenue trend and the reduction in costs have resulted in an adjusted EBITA margin of 3.4%, a material sequential increase of 100 basis points. As in the past, we will act in a highly disciplined way with regards to pricing and further optimise our underlying cost base."

The Group says further that "Adecco has seen first signs of a demand pick-up in general staffing. In particular, the light industrial segment, noticeably in France and in the USA & Canada, improved during the third quarter compared to the low base of the second quarter."

"The year-on-year revenue decline rate adjusted for business days improved over the course of the third quarter of 2009, and the trend continued in October with an expected decline rate of 22%. This is mainly driven by a lower comparable base, but also thanks to improving market conditions."

"The management team continues to focus its efforts on further structurally optimising the cost base while sticking to its value-based strategy. The recently announced acquisitions will significantly increase Adecco's exposure to the attractive professional staffing market, thereby strengthening the company's profitability profile in the mid-term."

"Adecco expects to incur approximately 35 million Euro of restructuring costs in the fourth quarter of 2009 for various countries as part of the previously announced guidance of 40 million Euro for the second half of 2009."

In early trading Adecco's shares were up by 2.39% to 49.66 CHF



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