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To: maceng2 who wrote (515)	1/12/2004 7:40:23 AM
From: maceng2	Respond to of 1417

Ho Ho Ho Adecco plummets on US accounting fears By Richard Milne Published: January 12 2004 8:35 \| Last Updated: January 12 2004 10:54 news.ft.com Adecco shares were close to halving in value on Monday as the world's largest temporary staffing agency said it would delay release of its 2003 financial results following question marks over its accounting procedures. The shares were down 45 per cent to SFr45.40 in midday trading in Zurich on Monday after the Swiss group said it had appointed an independent lawyer to conduct an investigation. To read more on the market reaction, click here "It's serious and it will take time until it is worth investing in it again. But I wouldn't say it was another Parmalat," said Ronald Wildmann, analyst at Bank Leu. Adecco said the reasons for delaying its results included "the identification of material weaknesses in internal controls" in its North American operations of Adecco Staffing, and "the resolution of possible accounting, control and compliance issues" in certain countries. The group was seeking to determine the impact of these issues on its results for the year to December 28, which were due out on February 4. It said it could not yet predict when the results would be published. Ernst & Young are currently the group's auditors, having taken over from the now defunct Arthur Andersen in 2001. E&Y refused to comment on Monday. Analysts said that Adecco's refusal to comment further, citing legal reasons, meant it was hard to gauge the extent of the problems. "The best case is that it is only North American Adecco Staffing, which accounts for about 4 per cent of profits and where the only problem I could envisage is with provisioning," said Mr Wildmann, after downgrading the stock from buy to sell. "But it's a real problem if it's revenue recognition problems as this could affect key contracts on a worldwide basis." Dresdner Kleinwort Wasserstein analysts wrote that the announcement was "as bad as it gets". They speculated that Adecco's acquisition in 2000 of Olsten, which was primarily focused on the US, could be unravelling. Goodwill from that deal amounted to SFr2.3bn ($1.9bn), DrKW said, and other analysts estimated about 40 per cent of it remained on the books. "There was a lot of pressure on the US business to show a turnaround," one Zurich-based analyst said. "But the belief was that accounting wasn't an issue because it's a day-to-day business. There is not a lot of space to speculate." The US market accounted for 24 per cent of the group's operating profits in the first half of 2003 but analysts estimate the US Adecco Staffing business provides only 4-5 per cent. Adecco's third-quarter results, released in October, painted a mixed picture for the group, with sales falling 3 per cent in euro terms while operating profits rose 19 per cent. It cut several thousand jobs last year as part of a cost-cutting programme due to weakness in employment markets.