The Adecco Group 2017 Annual Report Making the future work for everyone Making the future work for everyone 2017 Annual Report THE ADECCO GROUP AT A GLANCE One company, many strengths Workforce Solutions Our global footprint Contribution to Group revenues We provide candidates with generalist skills Office North to small, medium and large clients, mainly We provide clerical and support personnel America: through temporary staffing, permanent in all areas of office-based employment. placement and outsourcing services. 19% Workforce Solutions operates across all Industrial sectors, under the global Adecco brand. We provide candidates for blue-collar Our ‘recruitment on demand’ online staffing job profiles across many industrial and platform operates under the relaunched service sectors. Adia brand, mainly focusing on hospitality and events. Workforce Solutions comprises Contribution to Group revenues: two business lines: 76% Office: 24% Industrial: 52% Our lead brands and global footprint Professional Staffing & Solutions We support our clients in finding and Finance & Legal attracting talent with professional and We support organisations by finding qualified highly sought-after skills. Our global lead professionals in the accounting, finance and brands in Professional Staffing & Solutions legal disciplines. are: Badenoch & Clark, Modis, Spring Professional and YOSS. Medical & Science We recruit and place medical professionals Information Technology (IT) on a permanent or temporary basis in We support organisations across medical and science-related industries. all industries in their IT workforce requirements. Contribution to Group revenues: More than Engineering & Technical We provide candidates with skilled 21% Information Techonology: 10% professional profiles across all engineering Engineering & Technical:34,000 5% and technical disciplines to clients in a wide Finance & full-timeLegal: equivalent employees 4% range of industries. Medical & Science: 2% 100,000+ clients Temporary staffing Permanent placement Career transition Outsourcing We supply associates to We help employers to recruit We support organisations We offer flexible HR solutions organisations on a temporary talent for permanent roles, and their employees through in which we staff and manage basis, providing flexibility securing the skills needed for an changes that require individuals the whole of a labour-intensive to employers and new organisation’s ongoing success. to transition out of their activity, such as warehouse opportunities to candidates. existing roles. logistics, call centre operations, Our services or IT support. Talent Development & Career Transition Japan and Rest of We offer services under the global brand Contribution to Group revenues: Lee Hecht Harrison, providing solutions to World: large and small clients around the world. 5% Japan 17% 2% 4% Latin America Workforce Transformation 3% Eastern Europe & MENA 2% Asia Lee Hecht Harrison is the world’s leading 2% Australia & career transition and talent development New Zealand brand, helping individuals and organisations 1% India navigate workforce change. Lee Hecht Harrison1: 2% MSP & RPO 23% France We offer full HR outsourcing solutions, 9% UK & Ireland Recruitment Process Outsourcing 9% Germany, Austria, including MSP and RPO, through Pontoon, (RPO) Switzerland a global leader in contingent and permanent Recruitment Process Outsourcing enables 9% Benelux & Nordics workforce acquisition and talent advisory clients to outsource the entire permanent 8% Italy solutions across all industries. recruitment process to us to harness the full 4% Iberia benefit of our expertise and experience in Europe: Managed Service Programmes (MSP) hiring large numbers of employees. 62% Managed Service Programmes involve taking over part of the HR function Contribution to Group revenues: within an organisation to manage all of its contingent and flexible workforce needs. Over 1% 700,000 associates on assignment daily 1 Lee Hecht Harrison is managed as a global business line. Read more on pages 30-35 MSP & RPO Talent development Managed Service Programmes Recruitment Process Outsourcing We provide leadership coaching, career We manage all parts of the flexible workforce We handle the entire hiring process for development programmes and change at organisations using a large number of organisations recruiting large numbers management support. contingent workers. of permanent employees. Revenue % 88 2 2 8 69 11 8 12 Gross profit % CONTENTS AND INTRODUCTION Company report Governance Financial statements The Adecco Group at a glance IFC Applicable Corporate The Adecco Group Message from the Chair and Governance standards 63 Selected financial information 98 Chief Executive Officer 2 Structure, shareholders Consolidated financial 2017 Highlights 4 and capital 64 statements 99 Chief Executive Officer’s Board of Directors, Executive Report of the Statutory Auditor strategic review 6 Committee and compensation 67 on the Consolidated Financial Making the future work for Further information 79 Statements 136 everyone 12 Adecco Group AG Perform 12 Remuneration (Holding Company) Transform 16 Introduction 83 Financial Statements 138 Innovate 20 Remuneration governance 85 Major consolidated subsidiaries of the Adecco Group 148 Our business model 24 Remuneration philosophy, principles and framework 86 Proposed appropriation of Global megatrends 26 Remuneration structure 86 shareholders’ equity 149 Our strategic focus areas 30 Remuneration and shareholding Report of the Statutory Auditor Workforce Solutions 32 of members of the Board and on the Financial Statements 150 Professional Staffing & Solutions 33 Executive Committee 91 Talent Development Additional information & Career Transition 34 Non-GAAP information and MSP & RPO 35 financial measures 153 Our performance management History 154 framework 36 Key figures 156 Risk management and principal risks 38 Material factors impacting our business 40 Our people 42 The Foundation 46 Operating and financial review 50 Investor relations information 59 Our investment story Global The Adecco New Higher value, megatrends Group is taking employment lower costs, less are changing the lead in this models bring capital will drive the world of transformation exciting growth shareholder work opportunities returns Read more on page 7 Company report Governance InnovateMaking the future work for everyone Remuneration Financial statements Additional information The Adecco Group – 2017 Annual Report 1 MESSAGE FROM THE CHAIR AND CHIEF EXECUTIVE OFFICER Leaders in the changing world of work Rolf Dörig Alain Dehaze Chair of the Board Chief Executive Officer 2 The Adecco Group – 2017 Annual Report Company report Dear Adecco Group Perform, Transform and Innovate Making the future work for everyone Governance shareholders, The Group’s strategic agenda is summarised in We recognise that the Adecco Group three words: Perform, Transform and Innovate. has a responsibility which goes beyond our The Group had another solid year in 2017, with A simple formula that pervades everything we commitment to our shareholders. Our mission a good financial performance and significant do as an organisation. is to make the future work for everyone. From progress made against our strategic agenda. helping candidates find fulfilling work, and ‘Perform’ means that we will keep delivering Organic revenue growth accelerated to 6%, reshaping how clients obtain the requisite revenue growth, in the cost-disciplined, returns- as economic conditions in many of our end skills, to developing our own employees and focused way that we always have. It means markets improved, and we held our EBITA advising policymakers globally, we are helping Remuneration achieving strong cash flow to underpin a margin excluding one-offs broadly stable at people to successfully navigate the changing progressive dividend and financial investment. 4.9%. Cash flow generation also remained world of work. That means offering and strong, and we ended the year with a robust With ‘Transform’, we are strengthening our enabling greater flexibility while, at the same balance sheet. All this was achieved while core business to differentiate our offering from time, ensuring security for all in the labour making significant investments in the new that of our competitors, and to take profitable market. From facilitating policy development digital solutions and IT infrastructure that market share. Through our GrowTogether to shifting social trends, we are at the table will transform our business and allow us to programme, we are leveraging technology working to address the systemic challenges create more value for our clients, candidates, to enhance client and candidate experience that affect us all. associates, colleagues and other stakeholders. while, at the same time, reducing our cost-to- Financial statements With the new Adecco Group Foundation, we serve as we improve productivity. Leveraging opportunities in the will be focusing on helping underserved people changing world of work ‘Innovate’ describes how we will capture new make the transition into the workforce, and growth opportunities in markets adjacent to supporting the role of employers to encourage The Adecco Group is the leader in the world our existing businesses; in doing so, capitalising workforce vitality. of HR solutions. Every year we provide more on the megatrends. Our digital ventures, such We look forward to continuing this important than 3.5 million people with permanent and as Adia and YOSS,