Half Year Report 2012

Adecco Group –
Notes to consolidated financial statements (unaudited)
in millions, except share and per share information

Note 4 – Shareholders’ equity

Authorised shares and appropriation of available earnings

As of June 30, 2012 and December 31, 2011, Adecco S.A. had 4,166,804 shares of conditional capital reserved for issuance of common shares to employees and members of the Board of Directors upon the exercise of stock options. In addition, as of June 30, 2012 and December 31, 2011, Adecco S.A. was authorised by its shareholders to issue up to 15,400,000 shares of conditional capital in connection with the issuance of financial instruments, principally convertible bonds. The shares represent conditional capital authorised without time limitation and remain available for share issuance upon conversion of financial instruments issued or to be issued in the future.

In the first six months of 2012, the number of treasury shares acquired, net of disposals, totalled 396,324 and the net consideration paid amounted to EUR 12. Whereas in the same period of 2011, the Company purchased 3,073,000 treasury shares for a consideration of EUR 138 (including EUR 4 paid in July 2011). During the six months ended June 30, 2012 and the six months ended June 30, 2011, the Company used 280,169 and 96,506 treasury shares, respectively to fulfil its obligations under the employee long-term incentive plan. Furthermore, in the first six months of 2012 and the first six months of 2011, 6,555 and 4,697 treasury shares, respectively were awarded to the Chairman of the Board of Directors as part of his compensation package. In addition, during the six months ended June 30, 2011, 172 stock options were exercised. No stock options were exercised in the first six months of 2012.

The Annual General Meeting of Shareholders of Adecco S.A. was held on April 24, 2012. The shareholders approved a dividend of CHF 1.80 per share in respect of the fiscal year 2011. The entire dividends of EUR 256 were allocated from Adecco S.A.’s reserve from capital contributions (subaccount of general reserves) to free reserves and subsequently distributed to shareholders in the second quarter of 2012. The statutory reserve from capital contributions is classified as additional paid-in capital in the consolidated balance sheet.

Additional paid-in capital

During 2009, the Company sold a prepaid forward on Adecco S.A. shares for EUR 587 (CHF 887), net of costs, and purchased a call spread option for EUR 108 (CHF 164) from its wholly owned, non-consolidated subsidiary Adecco Investment as described in Note 1. The prepaid forward and the call spread option are indexed to and settled in the Company’s own shares and therefore are accounted for as equity instruments included in additional paid-in capital. The strike prices of both instruments have been reduced whenever the Company made a dividend distribution by a fraction determined as follows: (share price excluding dividend minus dividend per share) divided by (share price excluding dividend). In 2012, the strike prices of both instruments were reduced due to the dividend distribution made by the Company in the second quarter.

The initial and current terms of these contracts are as follows:

 

Sold prepaid forward

Purchased call spread option

 

Initial

30.06.2012

Initial

30.06.2012

Forward/strike price

CHF 50.50, received on
November 26, 2009

 CHF 46.98

 Lower call price = CHF 50.50

 Upper call price = CHF 60.60

 Lower call price = CHF 46.98

 Upper call price = CHF 56.37

Number of shares
to which the contract
is indexed

17,821,782 initial
underlying shares

 19,157,088 underlying
 shares

 17,821,782 initial underlying
 shares

 19,157,088 underlying
 shares

Maximum number of
shares to be delivered  

17,821,782 subject to
dividend and other anti-
dilution adjustments

 19,157,088 subject to
 dividend and other anti-
 dilution adjustments

 2,970,297 subject to
 dividend and other anti-
 dilution adjustments

 3,191,149 subject to
 dividend and other anti-
 dilution adjustments

Accumulated other comprehensive income/(loss), net

The components of accumulated other comprehensive income/(loss), net of tax, are as follows:

in EUR

30.06.2012

31.12.2011

 

 

 

Currency translation adjustment

(66)

(110)

Unrealised gain on cash flow hedging activities

2

2

Pension-related adjustments

(34)

(35)

Accumulated other comprehensive income/(loss), net

(98)

(143)