Performing Transforming Innovating

Alain Dehaze. Chief Executive Officer

2019 was a year of good execution in a challenging external environment. The business made significant progress on each pillar of its ‘Perform, Transform, Innovate’ strategy, achieving a solid financial performance and laying the foundations for future profitable growth. We are successfully transforming the Company by improving the business mix, delivering more value to all our stakeholders, and increasing operational efficiency. I am confident that we will build on this progress in 2020 and beyond.

Megatrends reshaping the world of work

Several megatrends are increasingly impacting the way that people choose to work and the way that organisations think about human capital. In 2017, we identified six key trends that describe the context in which our business operates, and which shape our strategy: geopolitical and economic uncertainty; the gig economy; skills imbalances; the new demographic mix; automation, AI and machine learning; and digitisation, big data and analytics.

Our long-term strategy will continue to build on the progress made in the past three years, to capitalise on the opportunities presented by the megatrends and to guard against the risks, allowing us to create more value for all of our customers and broader society.

Our competitive strengths

Some competitiors

Knowledge of complex labour regulations
Ability to manage large contingent workforces
Strong brand portfolio

Few competitiors

Global distribution (>100,000 enterprise clients)
Rich workforce data insights
Trusted on compliance & data security

Our unique assets

Widest scope of end-to-end HR solutions (including up/reskilling)
GrowTogether – a fundamental upgrade of our core solutions, driving differentiation and extending our cost leadership
Most comprehensive portfolio of digital HR platforms

Digital transformation drives differentiation and scale

We expect the Group’s digital evolution to drive increasing economies of scale. The ability to leverage technology investments across a global portfolio and to partner with leading technology players becomes crucial. Scale will also be key as data-driven insights become more important in the delivery of HR solutions.

This is a significant change for an industry where historically scale advantages were limited and barriers to entry were relatively low. We expect to be able to increasingly differentiate our solutions and service levels from those of the small local competitors that make up the bulk of the market. And there is a very large market opportunity to go after: despite being a global leader in HR solutions, the Adecco Group has only a 5% market share of the EUR 500 billion market.

Digital and rising complexity will encourage organic consolidation of the highly fragmented industry

The Adecco Group is a global market leader with only 5% market share

The Group’s digital evolution…

increases economies of scale
creates opportunities to differentiate
allows access to new markets/segments

A - Global peer 1: – 5%
B - The Adecco Group – 5%
C - Global peer 2: – 4%
D - Small global and large regional players - 11%
E - Remainder of the market - 75%

Transforming our core with GrowTogether

The GrowTogether programme is at the centre of the Group’s transformation agenda. Based on a detailed analysis of our operations, including time-and-motion studies in hundreds of branches and interviews with thousands of clients and candidates, we are reshaping the way we deliver our solutions to bring more value to our customers. In 2019, GrowTogether expanded in breadth and depth, and was further embedded into the organisation. Through multiple initiatives arranged around three key pillars – Service Excellence, Process Optimisation and Technology – the Group is driving improved client and candidate experience, while increasing operational efficiency.

GrowTogether is driving strong productivity gains(EURm)

Target
Realised

Leveraging the Ventures and the brand ecosystem to create unique solutions

We continued to invest in the Ventures portfolio during 2019, with positive results. General Assembly, the most mature venture, delivered strong double-digit growth, performing well in both B2C and Enterprise. GA was also successfully integrated into the Adecco Group ecosystem, combining with other Group brands to create unique solutions for clients and candidates, as well as revenue synergies. For example, GA’s capabilities were combined with LHH to create a complete workforce transformation offering, incorporating workforce assessment, up/reskilling and career transition, which gained good traction with clients.

The Group is also developing a portfolio of digital HR solutions platforms. While at an early stage of development these businesses have the potential to make a meaningful contribution to Group profits in the medium to long term.

Committed to sustainable business conduct

At the Adecco Group, we aspire to positively influence the world of work and lead by example in how we conduct our business and address society’s most pressing challenges. Through our core business of providing access to livelihoods and opportunity we create social and economic value for our stakeholders. And we play our part in safeguarding the planet for future generations: in 2019, we committed to becoming carbon neutral as an organisation by 2030, by significantly reducing our own carbon footprint and exploring opportunities to offset remaining emissions. Our approach to responsible business conduct is underscored by our continued commitment to the United Nations Global Compact and its ten important principles in the areas of human rights, labour, environment and anti-corruption, as expressed by this report. We are proud of the progress we have made, and excited about the possibilities that lie ahead.

2020 and beyond

We will continue to focus on enhancing our gross margin by moving up the value chain and on scaling up and broadening the deployment of proven digital tools, to drive service differentiation and operational efficiency. Indeed, we entered 2020 with good momentum in our strategic programmes, giving us reason for cautious optimism. Having over-delivered in 2019, we expect GrowTogether productivity savings to increase again in 2020 to achieve the EUR 250 million target, an incremental benefit of EUR 110 million year on year.

Beyond 2020, we see a wealth of further opportunity. We will continue to help all our stakeholders navigate, adapt and succeed in the changing world of work. The Perform, Transform, Innovate strategy has begun a process of digital transformation and portfolio enhancement that will continue. It provides a solid foundation from which to drive structural growth, strengthen our margin, and to generate continued strong cash flow, to deliver on our financial commitments and on our purpose – to make the future work for everyone.

Signature of Alain Dehaze

Alain Dehaze
Chief Executive Officer

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