SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20552
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): April 18, 1997
INTERIM SERVICES INC.
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
0-23198
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(Commission File Number)
36-3536544
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(IRS Employer Identification no.)
2050 SPECTRUM BOULEVARD
FORT LAUDERDALE, FLORIDA 33309-3008
(954) 938-7780
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(Address, including zip code, and telephone number
of principal executive offices)
Not Applicable
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(Former name or former address, if changed since last report)
NOTE: Wherever used throughout this report and the attached exhibits, the symbol
"[L]" is used to represent the symbol for Pounds Sterling.
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 18, 1997, Interim Services (UK) PLC ("Interim UK"), a wholly-owned
subsidiary of Interim Services Inc. (the "Company" or "Interim"), acquired 74.8%
of the outstanding ordinary share capital of Michael Page Group PLC ("Michael
Page") pursuant to a cash tender offer with a loan note alternative (the "Tender
Offer") to Michael Page's public shareholders. When aggregated with the 17.3%
ownership held by Interim UK as a result of open market purchases made since the
announcement of the Tender Offer, Interim UK's holdings totaled approximately
92% of the outstanding ordinary share capital of Michael Page.
Agreement as to the terms of the Tender Offer was publicly announced by the
boards of Michael Page and the Company on March 3, 1997 and the Tender Offer was
commenced in the United Kingdom by Interim on March 14, 1997. On April 18, 1997,
Interim UK declared the Tender Offer "unconditional" in all respects and payment
for the tendered shares was made on May 2, 1997. Interim UK expects to acquire
the remaining outstanding Michael Page shares by June 9, 1997 pursuant to United
Kingdom statutory powers available to compulsorily acquire shares not purchased
in a tender offer.
The per share price for the fully diluted shares of Michael Page, excluding
the ordinary dividend declared March 3, 1997, will be [L]5.50, or $8.92 based
upon conversion rates at May 1, 1997. The aggregate consideration paid for the
48,349,087 shares acquired pursuant to the Tender Offer to date was
$413,372,223, based on such conversion rate. A total of $95,664,638 was paid for
the 10,721,550 shares purchased in the open market, excluding the effects of the
ordinary dividend declared March 3, 1997. The Company and Interim UK (the
"Borrowers") obtained such funds from borrowings of approximately $509,036,861
under a $675,000,000 syndicated credit agreement entered into as of May 1, 1997
(the "Credit Facility"). The Credit Facility consists of a revolving loan
facility of $400,000,000 and a term loan of $275,000,000. Interest rates on
amounts outstanding under the Credit Facility are based on LIBOR plus a variable
margin, determined by certain financial tests. The lenders under the Credit
Facility are NationsBank N.A., individually and as agent, The First National
Bank of Chicago, individually and as documentation agent, The Sanwa Bank
Limited, Bank of Tokyo-Mitsubishi Trust Company, Barnett Bank, N.A., Bank of
Montreal, Comerica Bank, Hibernia National Bank, ABN AMRO Bank NV, The Fuji Bank
and Trust Company, The Industrial Bank of Japan, Limited, Atlanta Agency, Fleet
National Bank, Morgan Guaranty Trust Company of New York, The Chase Manhattan
Bank, The Sumitomo Bank, Limited and The Bank of New York. Borrowings under the
Credit Facility are secured by the Borrowers' pledge of the stock of their
subsidiaries and are guaranteed by the Company's subsidiaries. The borrowings
under the revolver portion of the Credit Facility mature on May 1, 2003, subject
to prepayment by the Company at any time.
Michael Page is a market leader in the recruitment of accounting, finance,
sales and marketing, information technology and legal professionals for both
permanent and temporary positions under the Michael Page brand name. In
addition, Michael Page operates businesses under the Accountancy Additions and
Sales Recruitment Specialists brand names for junior positions within these
disciplines. During 1996, Questor, an executive search and selection business,
was also founded in the UK by Michael Page. In addition to its leading position
in the UK's executive recruitment industry, the group has developed its
international business with operations in France, The Netherlands, Germany,
Australia, Singapore, Spain and Hong Kong. In total Michael Page operates 41
offices in eight countries.
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
The consolidated financial statements of Michael Page as of December 31,
1996 together with the independent auditors' report of Arthur Andersen, with
respect thereto are filed as Exhibit 99.4 to this Current Report.
(b) PRO FORMA FINANCIAL INFORMATION.
The combined pro forma condensed consolidated financial statements of Aim
Executive Holdings, Inc. ("Aim"), Interim Healthcare of Broward, Inc., Interim
Healthcare Hollywood, Inc., Interim Healthcare Dade, Inc., Interim Healthcare
Miami, Inc., We Care Home Care d/b/a Interim Home Solutions, Interim Accounting
Professionals of San Diego, Interim Personnel of Yakima, Inc., Thompson and
Thompson, Inc., and Centex Personnel Pool, Inc. ("Other Acquisitions"), and
Michael Page, and the Company are attached hereto as Exhibit 99.6 and
incorporated into this Amendment No. 1 to Current Report on Form 8-K.
(c) EXHIBITS.
The following exhibits are filed with this report:
Number Description
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23.1 Consent of Arthur Andersen.
99.1 Press release dated March 3, 1997.
99.2 Press release dated April 7, 1997.
99.3 Press release dated April 21, 1997.
99.4 Michael Page Annual Report and Accounts 1996 including the
consolidated financial statements as of December 31, 1996
together with the independent auditors' report of Arthur
Andersen with respect thereto.
99.5 Additional note to Michael Page financial statements.
99.6 Pro forma Condensed Consolidated Financial Statements
of the Company as of December 27, 1996.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INTERIM SERVICES INC.
DATE: May 9, 1997 By: /s/ John B. Smith
-----------------------------------
John B. Smith, Esq.
Senior Vice President and
General Counsel
4
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
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23.1 Consent of Arthur Andersen.
99.1 Press release dated March 3, 1997.
99.2 Press release dated April 7, 1997.
99.3 Press release dated April 21, 1997.
99.4 Michael Page Annual Report and Accounts 1996 including the
consolidated financial statements as of December 31, 1996
together with the independent auditors' report of Arthur
Andersen with respect thereto.
99.5 Additional note to Michael Page financial statements.
99.6 Pro forma Condensed Consolidated Financial Statements
of the Company as of December 27, 1996
5
EXHIBIT 23.1
[ARTHUR
ANDERSEN LOGO]
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9 May 1997 Abbots House
Abbey Street
The Board of Directors Reading RG1 3BD
Windsor Bridge House 0118 950 8141 Telephone
1 Brocas Street 0118 950 8101 Facsimile
Bron
SL4 6BW
Dear Sirs
Re Michael Page Group Plc Statutory accounts for the year ended 31 December 1996
As Chartered Accountants and Registered Auditors, we hereby consent to the
inclusion of our opinion dated 7 March 1997 on the above mentioned accounts in
the Current Report Form 8-K/A dated 9 May 1997 of Interim Services Inc. to be
filed with the Securities and Exchange Commission.
We also confirm that had this note been included in the accounts we would have
been prepared to extend our audit report of 7 March 1997 to cover the
information included in the additional note presented at Exhibit 99.5 to the
Current Report Form 8-K/A document referred to above.
Yours Faithfully,
/s/ Arthur Andersen
Arthur Andersen
EXHIBIT 99.1
INTERIM ANNOUNCES $574 MILLION CASH TENDER OFFER
FOR MICHAEL PAGE
TRANSACTION WOULD LAUNCH INTERIM INTERNATIONAL PRESENCE
Ft. Lauderdale, Fla., March 3, 1997--Interim Services Inc. (NYSE: IS) today
announced a cash tender offer to purchase all of the outstanding shares of
Michael Page Group PLC (London: PMG), a U.K.-based international provider of
recruitment and staffing. Michael Page 1996 revenues were $220 million, with
pre-tax income of $48 million. At today's exchange rates, the transaction is
valued at approximately $574 million. The combined companies would have had 1996
revenues of $2.1 billion and approximately 1,040 offices serving nine countries.
The transaction would make Interim a worldwide leader in professional
recruitment and staffing. The acquisition is also expected to significantly
augment expansion opportunities for Michael Page in North America and to
accelerate the ability of Interim to expand its commercial staffing business in
the UK, Continental Europe and the Pacific Rim.
Interim expects to complete the tender offer within 90 days and anticipates
the acquisition will be accretive in 1997 by $.01 to $.02, depending on the
closing date and interest and foreign exchange rates. Management also believes
the acquisition will be significantly accretive in 1998.
According to Interim President and CEO Ray Marcy, "This is the most
significant acquisition in Interim's 50 year history. It represents dramatic
progress in our aggressive growth strategy aimed at distinguishing Interim
worldwide as a comprehensive human resource partner with its clients. We are
aligning ourselves with what we believe is the preeminent staffing and
recruiting company operating outside of North America."
Interim, based in Ft. Lauderdale, Fla., is a $1.8 billion staffing industry
leader with approximately 1,000 offices in North America, Canada and Europe. Its
Commercial Division makes up 80% of company revenues. In addition to traditional
flexible staffing, through its Professional Services business unit Interim
provides staffing and consulting services in accounting, legal, technology,
human resources, search and outplacement. Its HealthCare Division, which
comprises 20% of revenues, offers nurses, physicians, therapists and home health
aides. Over the past decade, Interim revenues have grown at an annual average
growth rate of 23%.
Michael Page is a premier international recruiting and staffing company,
which specializes in accounting, finance, technology, sales and marketing.
Michael Page's 40 offices span the United Kingdom, France, The Netherlands,
Germany, Australia, Hong Kong and Singapore. Its business is split 50% flexible
staffing and 50% full-time placement, and its revenues increased 36% in fiscal
year 1996.
<PAGE>
Michael Page is a dominant force, particularly in the accounting and
finance arena. A significant portion of its client base is comprised of the
largest international banks and financial institutions in the world. The company
has an excellent track record of success, particularly in its ability to operate
at high profit margins. Its EBIT margins in 1996 were approximately 20%.
With the acquisition completed, Interim would become a worldwide leader in
professional services in terms of size, scope of services and global coverage.
Combined revenues on a full-year pro forma basis for 1997 in the professional
services arena alone should exceed $700 million.
Michael Page would have the immediate ability to expand under its brand
name in major financial centers throughout the U.S., such as New York, San
Francisco and Los Angeles. Once established in the U.S., Michael Page would have
a unique presence in nearly all major financial centers in the world, enabling
it to recruit and place financial talent on an international basis--from London
to Hong Kong, or from New York to Sydney.
Michael Page has built a strong infrastructure throughout the world's most
developed temporary help markets, while focusing exclusively on higher-margin
professional services. The combination will enable Interim to leverage this
infrastructure and expand its temporary help and workforce management operation
(Commercial Staffing business), replicating abroad the synergies that exist
between Interim Commercial Staffing and Professional Services in the U.S.
Michael Page Chief Executive Terry Benson will remain with the company and
retain his current title. He will continue to have primary responsibility for
developing the Michael Page brand worldwide, while Michael Page Finance Director
Ian Nash will continue to manage its financial direction. Michael Page will
operate as a subsidiary of Interim Services Inc.
Benson stated, "We have strategically aligned ourselves with the finest
staffing company in North America. After many months of getting to know one
another, we have great comfort in the similarities in our culture, philosophy
and vision. We believe Michael Page's entry into the important U.S. market will
be greatly accelerated by this transaction and the extensive Interim client
base. We are additionally pleased to introduce Interim to our clients worldwide,
thereby expanding the range of services provided to them to include temporary
help."
Marcy added, "We are extremely impressed with Terry and the credentials of
his entire management team. While operating in different parts of the world, we
are amazed at how aligned the two companies are in terms of business philosophy,
specifically the goal of creating a decentralized management structure and
providing value-added client services."
Interim will finance the acquisition under a $675 million senior loan
facility provided by NationsBank. This facility will allow the company to
continue to make smaller, selective acquisitions, in addition to those recently
announced--AimExecutive Holdings, Inc. and Interplan and Allround in The
Netherlands.
Interim Chief Financial Officer Roy Krause commented, "Michael Page's
dramatic growth has come entirely from internal expansion, and yet they remain a
significant generator of cash. At the end of 1996, Michael Page had more than
$60 million in cash on its balance sheet."
This press release contains certain forward-looking statements regarding
the prospects of Interim and net income per share estimates which involve risks
and uncertainties. The company's actual results could differ materially from the
results anticipated in these forward-looking statements as a result of certain
factors set forth under the "Risk Factors" and elsewhere in the company's
Registration Statement on Form S-3 dated October 17, 1996, and as discussed in
2
<PAGE>
the company's reports on Forms 10-K , 10-Q and 8-K made under the Securities and
Exchange Act of 1934. In addition, changes in market, business or economic
conditions, fluctuations in currency exchange rates or significant acquisitions
or other transactions could create material differences in the results
anticipated in these forward looking statements.
3
EXHIBIT 99.2
INTERIM ANNOUNCES 79% OF SHARES TENDERED OR
ACQUIRED IN OFFER FOR MICHAEL PAGE
Ft. Lauderdale, Fla., April 7, 1997--Interim Services Inc. (NYSE: IS) today
announced that it has acquired or received tenders for 79% of the outstanding
shares of Michael Page Group PLC (London: PMG). The cash tender offer was
previously announced on March 3, 1997 and was valued at approximately $574
million. Interim expects to attain its goal of receiving more than 90% of the
Michael Page shares and anticipates that it will complete the acquisition on or
before May 1.
The shareholders of Michael Page, a U.K.-based international recruiting and
staffing company, had a minimum of 21 days to consider tendering their shares to
Interim.
Interim President and CEO Ray Marcy commented, "The number of shares
tendered within 21 days reflects the widespread agreement among Michael Page
shareholders to proceed with the transaction.
"This acquisition represents dramatic progress in our vision of becoming a
global leader in providing human resource solutions. We look forward to working
with Michael Page management to build this worldwide leadership position. We are
also excited about the synergy this transaction will yield. It will accelerate
Michael Page's entry into major U.S. markets, as well as augment expansion
opportunities for Interim internationally."
Interim, based in Ft. Lauderdale, Fla., is a $1.8 billion staffing industry
leader with approximately 1,000 offices in North America, Canada and Europe. Its
Commercial Division, which makes up 80% of company revenues, provides staffing
and consulting services in accounting, legal, technology, human resources,
search and outplacement; as well as clerical, administrative and light
industrial. Its HealthCare Division, which comprises 20% of revenues, offers
nurses, physicians, therapists and home health aides.
Michael Page is a premier international recruiting and staffing company,
which specializes in accounting, finance, technology, sales and marketing.
Michael Page's 40 offices span the United Kingdom, France, The Netherlands,
Germany, Australia, Hong Kong and Singapore. Its business is split 50% flexible
staffing and 50% full-time placements. The company had 1996 revenues of $220
million, with pre-tax income of $48 million.
EXHIBIT 99.3
INTERIM ANNOUNCES CLOSING OF MICHAEL PAGE
ACQUISITION AND EXPANSION PLANS FOR
SPAIN AND THE U.S.
Ft. Lauderdale, Fla., April 21, 1997--Interim Services Inc. (NYSE: IS)
today announced a successful conclusion of its tender offer for the stock of
Michael Page Group PLC.
Interim also announced that Michael Page has expanded in Spain, with an
office in Madrid, and will embark on expansion in the United States, with an
office in New York City scheduled for October 1997.
Spain and the United States are new markets for Michael Page, an
international recruiting and staffing company based in the United Kingdom and
soon to operate as a wholly-owned subsidiary of Interim. Michael Page will
introduce its accounting, banking, financial and other recruitment and staffing
services in these markets. These locations will continue to build Michael Page's
presence in financial capitals across the globe and enhance its ability to
recruit and place the world's top talent across continents -- from London to
Hong Kong and from Sydney to New York.
According to Interim President and CEO Ray Marcy, "We are delighted to have
the entire Michael Page organization onboard and excited to realize the
synergistic opportunities for expansion that exist for both Michael Page and
Interim service offerings. In addition to Madrid and New York, we anticipate
continued Michael Page expansion opportunities in 1997 and 1998 in key U.S.
banking and financial markets, such as San Francisco and Los Angeles.
"Michael Page's strong reputation and infrastructure throughout the world
will also accelerate acquisition opportunities for Interim in Europe and the
Pacific Rim. Our goal is to implement worldwide the successful model we've
established in North America, where we serve as a human resource solution for
clients by providing the most comprehensive range of value-added services. This
includes traditional flexible staffing, recruitment, search, consulting and
outplacement for a broad range of specialty skills."
Michael Page Chief Executive Terry Benson commented, "We are excited to
bring our recruitment expertise to the financial community of Spain. Madrid is
an important market for us, and we believe our entry there is particularly
timely. Partly due to deregulation, the Spanish staffing industry is
experiencing growth rates in excess of 30%.
"The next step of our expansion plan is equally exciting. New York is the
largest financial market in the world, and our presence there will close a key
circuit in our worldwide network of accounting, banking and financial skills."
The entry of Michael Page into the U.S., initially through New York, will
be aided by the relationships both companies have with multinational clients
based there. These include some of the largest banking and finance organizations
in the world such as J.P. Morgan, Goldman Sachs, Bankers Trust and Chase
Manhattan.
<PAGE>
Benson added, "We are a market leader in each of the countries we operate
in today. Now as part of Interim, we look forward to working toward leadership
positions in Spain and the United States."
Interim advised the London Stock Exchange on April 18th that it had
purchased or received and accepted tenders for 92% of the outstanding shares of
Michael Page and that it had declared its offer unconditional. Interim expects
to acquire the remaining 8% of shares outstanding by June 30th. In addition,
Interim management anticipates that Michael Page will achieve the financial
results expected by Interim for the current fiscal year.
Interim, based in Ft. Lauderdale, Fla., is a $1.8 billion staffing industry
leader with approximately 1,000 offices in the United States, Canada and Europe.
Its Commercial Division, which makes up 80% of company revenues, provides
staffing and consulting services in accounting, legal, technology, human
resources, search and outplacement; as well as clerical, administrative and
light industrial. Its HealthCare Division, which comprises 20% of revenues,
offers nurses, physicians, therapists and home health aides.
Michael Page is a premier international recruiting and staffing company,
which specializes in accounting, finance, technology, sales and marketing.
Michael Page's 40 offices span the United Kingdom, France, The Netherlands,
Germany, Australia, Hong Kong, Singapore and Spain. Its business is split 50%
flexible staffing and 50% full-time placement. The company had 1996 revenues of
$220 million, with pre-tax income of $48 million.
This press release contains certain forward-looking statements regarding
the company's financial prospects which involve risks and uncertainties. The
company's actual results could differ materially from the results anticipated in
these forward-looking statements as a result of certain factors set forth under
the "Risk Factors" and elsewhere in the company's Registration Statement on Form
S-3 dated October 17, 1996, and as discussed in the company's reports on Forms
10-K , 10-Q and 8-K made under the Securities and Exchange Act of 1934. In
addition, changes in market, business or economic conditions, or significant
acquisitions or other transactions could create material differences in the
results anticipated in these forward looking statements.
2
EXHIBIT 99.4
<TABLE>
REPORT & ACCOUNTS 1996
NINE YEAR REVIEW
<CAPTION>
1988 1989 1990 1991 1992 1993 1994 1995 1996
[L]'000 [L]'000 [L]'000 [L]'000 [L]'000 [L]'000 [L]'000 [L]'000 [L]'000
-------- -------- ------- -------- ------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TURNOVER
Continuing operations .............. 22,604 35,266 39,098 35,992 40,303 49,218 74,291 103,783 142,144
Discontinued operations ............ 16,964 15,574 14,482 4,926 3,341 1,976 -- -- --
-------- -------- ------- -------- ------- -------- ------- -------- --------
TOTAL TURNOVER ..................... 39,568 50,840 53,580 40,918 43,644 51,194 74,291 103,783 142,144
-------- -------- ------- -------- ------- -------- ------- -------- --------
OPERATING PROFIT
Continuing operations .............. 4,062 5,474 5,072 1,069 2,059 3,495 8,493 16,732 28,857
Discontinued operations ............ 693 491 (597) 220 (116) (128) -- -- --
-------- -------- ------- -------- ------- -------- ------- -------- --------
TOTAL OPERATING PROFIT ............. 4,755 5,965 4,475 1,289 1,943 3,367 8,493 16,732 28,857
-------- -------- ------- -------- ------- -------- ------- -------- --------
Net Interest ....................... 193 236 580 738 478 220 450 1,009 1,583
Demerger and reorganisation costs .. (1,498) -- -- -- -- -- -- -- --
Profit/(loss) on disposal of
operations ....................... -- -- 1,040 -- (384) 48 -- -- --
-------- -------- ------- -------- ------- -------- ------- -------- --------
PROFIT BEFORE TAXATION ............. 3,450 6,201 6,095 2,027 2,037 3,635 8,943 17,741 30,440
Taxation ........................... (1,624) (2,244) (1,908) (1,001) (639) (1,409) (3,190) (6,389) (10,660)
-------- -------- ------- -------- ------- -------- ------- -------- --------
PROFIT AFTER TAXATION .............. 1,826 3,957 4,187 1,026 1,398 2,226 5,753 11,352 19,780
-------- -------- ------- -------- ------- -------- ------- -------- --------
EARNINGS PER SHARE (p) ............. 3.06 6.52 6.84 1.62 2.33 3.67 9.51 18.39 31.47
DIVIDENDS PER SHARE (p) ............ 1.50 1.80 1.80 1.80 1.80 2.10 3.00 5.00 9.00
-------- -------- ------- -------- ------- -------- ------- -------- --------
</TABLE>
The above table shows the complete history of the Michael Page Group PLC since
it was incorporated as a public limited company on 15 April 1988.
FINANCIAL CALENDAR
RECORD DATE 1 April 1997
ANNUAL GENERAL 14 May 1997
DIVIDEND PAYABLE 23 May 1997
<PAGE>
REPORT & ACCOUNTS 1996
1996 FINANCIAL HIGHLIGHTS
1996 1995 INCREASE %
----------- ----------- ----------
TURNOVER .................................. [L]142.1 m [L]103.8 m 37.0%
OPERATING PROFIT .......................... [L] 28.9 m [L] 16.7 m 72.5%
PROFIT BEFORE TAX ......................... [L] 30.4 m [L] 17.7 m 71.6%
EARNINGS PER SHARE ........................ 31.47 p 18.39 p 71.1%
DIVIDENDS PER SHARE ....................... 9 p 5 p 80.0%
NET CASH .................................. [L]140.9 m [L] 26.1 m 57.0%
YEAR END HEADCOUNT ........................ 809 622 30.1%
MICHAEL PAGE GROUP PLC
1
<PAGE>
REPORT & ACCOUNTS 1996
CHAIRMAN'S STATEMENT
The continuing strength of the international recruitment market is
reflected in your Group's results for the year ended 31 December 1996. Profit
before tax rose 71.6% to [L]30.44m (1995 [L]17.74m) and earnings per share
increased to 31.47p (1995 18.39p). The Board is recommending an increased final
dividend of 7.0p per share (1995 3.9p), making a total of 9.0p for the year
(1995 5.0p), which will be paid on 23 May 1997 to shareholders on the register
at close of business on 1 April 1997.
With group profit at a record level for the third year running, my first duty
has to be to pay tribute to all our consultancy and support staff. Their hard
work and professional expertise has been an important factor in firmly
establishing your group as a leading international recruitment business
employing over 800 staff world-wide.
One sadness for us was the death last month of my distinguished predecessor,
Lord Rippon of Hexham, who made such a valuable contribution to our Group in its
early years.
All our UK based businesses contributed to these excellent results. Michael
Page Finance maintained its leading position in accountancy recruitment and
produced an 18.9% increase in turnover whilst Michael Page City took advantage
of a strong banking and financial services sector to increase turnover by 39.8%
and improve margins. Our growing reputation in the City combined with our
ability to quickly react to changes in market demand is a major strength.
By furthering its policy of creating industry-focused consulting teams,
Michael Page Sales and Marketing has seen its turnover increase by 32.7% on a
marginally increased headcount. This operation remains the sole multi-site
recruitment business covering this specialist market in the UK. Michael Page
Legal and Michael Page Technology both posted much improved results. Our Legal
recruitment business has been very successful in gaining market share in both
private practice and industry and commerce. Similarly, Michael Page Technology
benefited from having a highly experienced and focused consultancy team which
increased turnover by 94.6% in an extremely active marketplace. Accountancy
Additions raised turnover during a year which saw it strengthening its market
position and putting in place management structures to provide the foundation
for further expansion. Sales Recruitment Specialists grew turnover by over 200%
in a year notable for its increasing success in winning large national accounts.
Questor International, our recently established Search and Selection
consultancy, has achieved a better than anticipated start but will continue to
require financial support during 1997.
The Michael Page companies operating in Continental Europe experienced trading
conditions which were tougher than those in the UK. However, together they
managed to achieve a very satisfactory 34% increase in overall turnover. France
and Benelux were the most active areas with significant increases in both
turnover and profit. Although German turnover was up only marginally, Michael
Page Deutschland achieved a rise in profit before tax despite being at an early
stage in its development. Michael Page France continued to produce solid annual
growth despite a flat economic climate and its diversification into
non-financial recruitment has proved successful. Page Interim in France has
achieved an 83% turnover increase in only its second year of operation. In
Benelux our business boosted turnover by 38% and, in line with our well
established expansion strategy, they are moving into marketing and sales
recruitment in mid 1997.
We are actively reviewing opportunities for expanding our business into a
number of countries in the European Union and will be opening a new office in
Spain in the first half of 1997.
MICHAEL PAGE GROUP PLC
2
<PAGE>
Michael Page International in Australia has achieved a record year with turnover
and profit substantially ahead of last year. Its core accounting and finance
business continued to expand satisfactorily during the year and was complemented
by an excellent result from the now firmly established marketing and sales
recruitment operation. Towards the end of the year it further diversified into
information technology recruitment and in 1997 significant investment will be
made in this area.
In Hong Kong our turnover doubled in only the second full year of operation.
We are not anticipating any significant impact from the impending change in
control of the colony. In September 1996 we opened for business in Singapore and
we are satisfied with its progress to date.
Our successes of 1996 have been achieved through the efforts of our young,
professional and highly motivated management team throughout the world. Whilst
our business is cyclical, we achieved record margins in 1996 and trading
conditions currently remain strong. I am confident that 1997 will be another
year of opportunity.
On 3 March 1997 the Boards of Michael Page and Interim Services Inc. announced
that agreement has been reached on the terms of a recommended cash offer to be
made by J P Morgan on behalf of a wholly-owned subsidiary of Interim Services
Inc. for the whole of the issued and to be issued share capital of Michael Page
at a price of 550p in cash for each ordinary share.
In addition, shareholders will be entitled to retain the proposed final
dividend of 7p (net) in respect of the year ended 31 December 1996. Shareholders
will shortly receive an offer document which will provide further details.
Wakeham
7 March 1997
MICHAEL PAGE GROUP PLC
3
<PAGE>
REPORT & ACCOUNTS 1996
CHIEF EXECUTIVE'S REVIEW
In 1996 the Michael Page Group strengthened its position as one of the world's
leading recruitment consultancies. With a growing network of offices throughout
the world and a strategy of diversification into most management disciplines, we
continue to be successful in handling assignments for a vast client portfolio
and in assisting thousands of candidates to attain their career objectives.
All our businesses prospered during the year as you will see from the business
summaries which follow. Group profit for the year ended 31 December 1996 rose
71.6% to [L]30.4m, on a 37% turnover increase at [L]142m. These excellent
results, underwritten by the strength and depth of a management team of
unrivalled experience, are a tribute to the ability of our consultancy staff to
consistently improve business performance in a competitive market. The
importance of our international network of offices cannot be over estimated and
there is no doubt that our ability to offer clients this international
perspective is a determining factor in our winning their business.
With trading conditions currently remaining strong, I am confident that 1997
will be another year of opportunity and I am looking forward to our Group
providing an increasingly diversified range of recruitment services to an ever
expanding international client base.
Terry Benson
7 March 1997
MICHAEL PAGE GROUP PLC
4
<PAGE>
REPORT & ACCOUNTS 1996
Chief Executive's Review
MICHAEL PAGE FINANCE
This has been another year of progress for the Group's UK accountancy
recruitment business. Increases in both permanent fee turnover and temporary
turnover resulted in a combined 18.9% rise and profit level was significantly
higher than last year. All our UK offices contributed to this growth and the
strength of the network was evident in the improved business levels. During the
year we placed well over 3,000 candidates in permanent employment and saw the
average fee value of these placements increase by 12% - a reflection of the rise
in salary levels which is prevalent in the current market. Yet again Michael
Page was the Financial Times' largest recruitment advertiser with space taken
almost doubling. This resulted in us carrying four times the volume of our
nearest competitor.
MICHAEL PAGE CITY
With turnover up 39.8%, 1996 has been an outstanding year for Michael Page City.
Demand was strong at every level and across all specialisms but our success in
increasing the volume of assignments for the more senior appointments, has been
particularly satisfying. Our contract and temporary staff business also grew
appreciably. We continue to work in close cooperation with colleagues in our
offices throughout the world. Being part of a world-wide team of over 60 Michael
Page consultants who specialise in this sector, our ability to use these
international contacts gives us a very significant advantage particularly in the
global investment banking market.
MICHAEL PAGE SALES & MARKETING
During 1996, Michael Page Sales and Marketing increased turnover by 32.7%. This
excellent performance underlined the success of the policy of creating market
sector focused consultancy teams which was extended to our Birmingham office
during the year. All major business sectors grew during the year with the FMCG,
Agency and Durables areas all showing significantly higher levels of business.
New client wins included NatWest, Scottish Courage and Kodak. In 1996 we placed
over one thousand candidates into permanent positions and also provided our
clients with staff on a contract or temporary basis.
MICHAEL PAGE TECHNOLOGY
Michael Page Technology grew significantly during 1996 and turnover rose by
94.6%. Our policy of specialisation in discrete sectors has paid substantial
dividends in terms of business growth and has led to our winning major
assignments with prestigious clients such as Andersen Consulting, Price
Waterhouse Management Consultants, Sema, McKinsey & Co, Ernst & Young, BOC,
Cargill, Gillette, Whitbread, Kimberley Clark and United Distillers amongst
others.
MICHAEL PAGE LEGAL
During 1996 outstanding results were achieved with turnover up 158.8% and a
substantial rise in profits. We increased market penetration in private practice
where we have very strong relationships with a large number of firms of varying
size and specialisation. We were equally successful in growing the
industry/commerce wing of legal recruitment due largely to leverage of client
contacts from colleagues in Michael Page Finance and Michael Page Sales and
Marketing.
QUESTOR INTERNATIONAL
Since its launch in August 1996 Questor has specifically focused on chief
executive officer, board level and other senior specialist roles across all job
functions and across a wide range of market sectors. We are very pleased with
the positive market reception to Questor International's launch and are
confident that the foundations have been laid to build a major international
search and selection consultancy over the ensuing years.
ACCOUNTANCY ADDITIONS
1996 was a year of consolidation for Accountancy Additions which concentrated on
strengthening its established market position and putting in place the
management structures which will provide the foundation for further expansion.
Nevertheless, the company increased its overall turnover by 47%. These results
reflect a busy market generally in the South East and good results from our
established offices. Banking Additions our City operation, established in early
1996, also performed well.
SALES RECRUITMENT SPECIALISTS
A growth in turnover of 231.5% was achieved by SRS during 1996. This was a
superb result which reflected its ability to both win large national accounts
and increase the retained proportion of the assignments handled. This upsurge in
business levels has led to increased investment in the resources necessary to
cope with multiple candidate applications, new interviewing techniques and
candidate assessment days.
MICHAEL PAGE GROUP PLC
5
<PAGE>
REPORT & ACCOUNTS 1996
CHIEF EXECUTIVE'S REVIEW
FRANCE
Michael Page in France experienced a successful year with turnover up 37.9% and
significant increases coming from the information technology and sales sectors.
On the other hand, the banking and financial services sector was still depressed
although we have recently noticed signs of recovery. During 1996 we consolidated
our leading position and increased our advertising volume in Le Monde, Le Figaro
and Les Echos. Page Interim, which provides accountancy, finance and information
technology staff to clients on a contract basis, increased revenue and profit
significantly in only its second full year of trading.
BENELUX
The results for 1996, which show an overall 37.8% increase in turnover, are the
best ever achieved in the Netherlands. During the year permanent turnover
increased by 66.5% as a result of increased business activity and new client
gains. This assisted us in consolidating our position as the country's leading
classified advertiser with a 70% increase in volume. Our Interim Management
business was also active during the year and our concentration on a quality
service was rewarded by an increase in turnover of 20.4%.
GERMANY
The overall German recruitment market was weak during 1996 and this was
reflected in our results. Nevertheless we managed to improve both turnover and
profit for the year. We increased the volume of assignments handled during the
year by a combination of new client wins and increased business from established
clients including Adam Opel - General Motors, TetraPak and RWE.
AUSTRALIA
Michael Page International in Australia posted a fourth successive record year
with turnover up 44.5%. This continues an outstanding track record over the past
five years. Finance and accounting recruitment continued to be the core
activity. Overall we continued to develop strong relationships with major
clients including TNT, SUN Microsystems, Optus Communications, Pioneer, BHP,
Chase Manhattan, Macquarie Bank, Bankers Trust, Westpac and GE Capital. We
placed over 1,000 candidates into permanent employment at levels up to finance
director. We also increased our activity in the contracting and temporary
market. In only its second full year of operation our sales and marketing
recruitment company achieved a significant increase in business levels and has
benefited from establishing industry focused groups. Key names such as
Microsoft, IBM, Coca Cola and Honda were added to our client list. In the second
half of 1996 we established a new business dealing in IT recruitment.
HONG KONG
Our business in Hong Kong experienced an excellent year's trading with turnover
more than doubled on 1995 levels. We recruit for some of the world's most
prestigious organisations including J P Morgan, Merrill Lynch, ING Baring,
Morgan Stanley, Chase Manhattan, Coca Cola, Star TV, Proctor and Gamble and
Philip Morris. During 1996 we expanded our contract staff recruitment division
which, although in its early stages, has performed to expectations. Politically,
1997 is a year of momentous change for Hong Kong but economically business is
confident that this change will not have a significant impact.
SINGAPORE
We opened for business in Singapore in September 1996 and the first few months
of trading have been satisfactory.
MICHAEL PAGE GROUP PLC
6
<PAGE>
REPORT & ACCOUNTS 1996
DIRECTORS & ADVISERS
[PHOTOGRAPH]
Ian Nash, Michael Andrews, Lord Wakeham and Terry Benson
DIRECTORS
The Rt. Hon. Lord Wakeham, Non-Executive Chairman
Terry Benson, Chief Executive
Ian Nash, Finance Director
Michael Andrews, Non-Executive Director
ADVISERS
AUDITORS STOCKBROKERS BANKERS
Arthur Andersen de Zoete & Bevan Ltd Midland Bank plc
Abbots House Ebbgate House 74 Goswell Road
Abbey Street 2 Swan Lane London EC1V 7DA
Reading RG1 3BD London EC4R 3TS
SOLICITORS COMPANY SECRETARY & REGISTRARS
Berwin Leighton REGISTERED OFFICE IRG Limited
Adelaide House Ian V Nash, ACA Balfour House
London Bridge 39-41 Parker Street 390/398 High Road
London EC4R 9HA London WC2B 5LH Ilford IG1 1NQ
MICHAEL PAGE GROUP PLC
7
<PAGE>
REPORT & ACCOUNTS 1996
Report of the Directors
The Directors present their Annual Report on the affairs of the group together
with the audited accounts for the financial year ended 31 December 1996.
PRINCIPAL ACTIVITIES
The company is a holding company and its subsidiaries carry on the business of
recruitment and executive selection.
DIVIDENDS
On 11 November 1996 an interim dividend of 2p per share (1995: 1.1p) was paid.
The Directors are recommending a final dividend of 7p per share (1995: 3.9p)
payable on 23 May 1997 to shareholders on the register at close of business on 1
April 1997, making a total of 9p per ordinary share (1995: 5p) for the year.
REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTS
A review of the business and future developments is given in the Chairman's
Statement on pages 2 and 3 and in the Chief Executive's Review on pages 4 to 6.
DIRECTORS
The Directors of the company are listed on page 7.
NON-EXECUTIVE DIRECTORS
THE RT. HON. LORD WAKEHAM, FCA is also a Non-Executive Director of N M
Rothschild & Sons Ltd, Bristol & West Building Society and Enron Corporation
Inc, and a Director of other companies.
MICHAEL ANDREWS is also a Non-Executive Director of Angerstein Underwriting
Trust PLC, Bluebird Toys PLC, Credit Lyonnais Capital Markets PLC, Hambro
Countrywide PLC, NMB PLC and other companies.
DIRECTORS' BENEFICIAL SHARE INTERESTS IN MICHAEL PAGE GROUP PLC
ORDINARY SHARES
OF 2P EACH
----------------------
31.12.96 31.12.95
---------- ----------
Lord Wakeham ........................................... -- --
T W Benson ............................................. 100,000 100,000
I V Nash ............................................... 10,000 10,000
J M G Andrews .......................................... 13,500 13,500
No change took place in the interests of the Directors between 31 December 1996
and the date of this report. The Directors held no non-beneficial share
interests in the company.
SHARE CAPITAL
A total of 575,000-ordinary shares were issued during the year, details of which
appear in note 17.
SUBSTANTIAL SHAREHOLDINGS
At 3 March 1997 notification had been received of the following holdings of more
than 3% of the issued share capital of the company:
Prudential Assurance Company ........................................ 11.1%
Michael Page Group Employee Share Trust ............................. 3.4%
MICHAEL PAGE GROUP PLC
8
<PAGE>
REPORT & ACCOUNTS 1996
REPORT OF THE DIRECTORS
SPECIAL BUSINESS AT THE ANNUAL GENERAL MEETING
The notice of the meeting on pages 30 and 31 sets out special business to be
considered and, if thought fit, passed at the forthcoming AGM of the company.
Resolution 6 authorises the Directors to allot ordinary shares of the company up
to an aggregate nominal value of [L]357,830.
Resolution 7 enables the Directors to allot ordinary shares of the company for
cash as if the preemption provisions of section 89 of the Companies Act 1985 did
not apply, provided that such power of the Directors is limited to the allotment
of ordinary shares up to an aggregate nominal amount of [L]62,108 and the
allotment of ordinary shares pursuant to a rights issue.
The authorities granted in resolutions 6 and 7 will expire at the conclusion of
the 1998 Annual General Meeting of the company or the expiration of the period
of 15 months from the date of the resolution, whichever is the earlier.
Resolution 8 renews the authority of the company to purchase its own shares up
to an aggregate number of 8,900,000 ordinary shares. This authority will expire
at the earlier of the date of the 1998 Annual General Meeting of the company and
30 June 1998.
EQUAL OPPORTUNITY
The group endorses and supports the principles of equal employment opportunity.
It is the policy of the group to provide equal employment opportunity to all
qualified individuals which ensures that all employment decisions are made,
subject to its legal obligations, on a non-discriminatory basis.
DONATIONS
The group operates a Give as You Earn Scheme approved by the Inland Revenue and
matches employees' donations on a [L] for [L] basis. During the year the group's
donation to this scheme and other charities amounted to [L]12,070 (1995:
[L]16,418). All donations were made to registered charities.
The group made no donation to any political organisation.
EMPLOYEE INVOLVEMENT
Communication with employees is effected through company information bulletins,
briefing meetings conducted by senior management and formal and informal
discussions. Interim Annual Reports are circulated to all staff. Informal
communication is further facilitated because of the group's divisional
organisation structure.
The group operates various Share Option Schemes and an Employee Share Trust, as
detailed in note 18.
CREDITOR PAYMENT POLICY
It is the policy of the company that each of the businesses in the group should
agree appropriate terms and conditions for its transactions with suppliers (by
means ranging from standard written terms to individually negotiated contracts)
and that payment should be made in accordance with those terms and conditions,
provided that the supplier has also complied with them.
AUDITORS
The Directors will place a resolution before the Annual General Meeting to
re-appoint Arthur Andersen as auditors for the ensuing year.
On behalf of the Board of Directors:
Ian Nash, Secretary
7 March 1997
MICHAEL PAGE GROUP PLC
9
<PAGE>
REPORT & ACCOUNTS 1996
CORPORATE GOVERNANCE
The Board of Directors supports the highest standards in corporate governance
and confirms that the Michael Page Group PLC complies with the Code of Best
Practice published by the Cadbury Committee, 'The Financial Aspects of Corporate
Governance', to the extent that the Board considers the provisions of the Code
to be practical for a company of this size.
BOARD OF DIRECTORS
The group Board of Directors currently consists of two Executive Directors and
two Non-Executive Directors. The full Board of Directors meets at regular
monthly meetings and additionally the Executive Directors meet regularly to
monitor and guide the performance of the group's operations worldwide. The Board
considers the Non-Executive representation to be entirely adequate for a company
the size of Michael Page Group PLC, although their number does not comply with
paragraph 4.3 of the Code of Best Practice. The Board intends that the
responsibilities of an audit committee should be discharged by all Directors.
The auditor will be present when the Board is carrying out the functions of an
audit committee. The-Remuneration Committee comprises the Non-Executive
Directors, and its policy is detailed below.
INTERNAL FINANCIAL CONTROLS
The Board of Directors has overall responsibility for the systems of internal
financial control in operation throughout the group. However, it has to be
understood that any system of financial control can only provide reasonable but
not absolute assurance against material mis-statement or loss. Each company
within the group has established a system of internal financial control which
the Board believes is appropriate to the size of its operation and the business
environment in which it exists.
The key elements of the group's internal financial control are as set out below:
* a comprehensive system of financial reporting to the Board, based on an annual
budget with monthly results reported against budget, analysis of variances and
scrutiny of key performance indicators;
* defined rules governing the appraisal and approval of capital expenditure
which include an annual budget monitored on a monthly basis and detailed
approval procedures incorporating appropriate levels of authority;
* the group has an established organisational structure with defined levels of
responsibility and authority particularly in the area of financial management.
The internal control system is further strengthened by the group's commitment to
ensuring employees have the appropriate level of knowledge, experience and
integrity to perform their duties; and
* management are encouraged to review the internal control procedures under
their control on a regular basis ensuring that weaknesses are identified and
appropriate action taken. The Board when constituted as the Audit Committee
reviews reports from management and external auditors.
The Directors have reviewed the operation and effectiveness of the system of
internal financial controls.
GOING CONCERN
After making enquiries, the Directors have a reasonable expectation that the
group has adequate resources to continue in operational existence for the
foreseeable future. For this reason they continue to adopt the going concern
basis in preparing the accounts.
MICHAEL PAGE GROUP PLC
10
<PAGE>
REPORT & ACCOUNTS 1996
REMUNERATION COMMITTEE REPORT
COMPOSITION OF THE REMUNERATION COMMITTEE
The Remuneration Committee is responsible for determining the contract terms,
remuneration, pensions and other benefits of the Executive Directors, including
executive share option schemes. The Remuneration Committee comprises the two
Non-Executive Directors of the group and is chaired by Lord Wakeham. The
Committee does not consider the fees payable to Non-Executive Directors, which
are determined by the Executive Directors.
COMPLIANCE
The Committee confirms that the group has complied throughout the accounting
period with the best practice provisions on remuneration committees prescribed
in the listing rules of the London Stock Exchange. It also confirms that, in
framing its remuneration policy, the Committee has given full consideration to
the Stock Exchange best practice provisions on remuneration policy, service
contracts and compensation.
POLICY ON REMUNERATION OF EXECUTIVE DIRECTORS
The Remuneration Committee aims to ensure that remuneration packages offered are
competitive and designed to attract, retain and motivate key individuals within
the group. The main components are:
* BASIC SALARY
The basic salary of each Executive Director is determined annually by the
Remuneration Committee taking into account the responsibility of the job, the
performance of the individual and rates of salary within comparable
companies/sectors.
* BENEFITS IN KIND
Executive Directors receive benefits in kind commensurate with their seniority
within the group. Benefits in kind primarily comprise the provision of a company
car, life insurance and health insurance.
* ANNUAL BONUS
Executive Directors are entitled to receive discretionary annual bonuses, based
on the performance of the group in its market over the year. Bonuses are not
pensionable.
* PENSION
The group contributes to a money purchase pension scheme for each Executive
Director. The contributions are based on a percentage of basic annual salary and
consequently there is no guaranteed pension entitlement.
* SHARE OPTIONS
The company provides to Executive Directors (and other senior executives)
options under executive share option schemes which enable them to participate in
the growth of shareholder value which they help to create. Executive Directors
are awarded share options on a discretionary basis.
CONTRACTS OF SERVICE
The Executive Directors each have a service contract with the company, under
which the notice period to terminate the contract, given by either the director
or the company, is 12 months. The Non- Executive Directors have consultancy
agreements with the company which may be terminated on reasonable notice by the
company.
ROTATION OF DIRECTORS
The director who retires by rotation in accordance with the Articles of
Association is Michael Andrews, who is standing for re-election.
MATERIAL INTERESTS IN CONTRACTS
The directors have no material interests in any contracts with the company or
any of its subsidiaries.
MICHAEL PAGE GROUP PLC
11
<PAGE>
<TABLE>
REPORT & ACCOUNTS 1996
REMUNERATION COMMITTEE REPORT
DIRECTORS' EMOLUMENTS
<CAPTION>
1996 1995 1996 1995
SALARY BONUS BENEFITS FEES TOTAL TOTAL PENSION PENSION
[L]'000 [L]'000 [L]'000 [L]'000 [L]'000 [L]'000 [L]'000 [L]'000
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EXECUTIVE DIRECTORS
T W Benson ............ 174 219 11 -- 404 342 18 17
I V Nash .............. 108 137 11 -- 256 217 11 11
M L Page .............. -- -- -- -- -- 184 -- --
NON-EXECUTIVE DIRECTORS
Lord Wakeham .......... -- -- -- 32 32 23 -- --
J M G Andrews ......... -- -- -- 13 13 13 -- --
Lord Rippon ........... -- -- -- -- -- 11 -- --
</TABLE>
Fees paid in respect of the services of Lord Wakeham were paid to a third party,
Genner Trust Ltd.
Fees paid in respect of the services of J M G Andrews were paid to a third
party, J Michael Andrews & Co Ltd.
<TABLE>
DIRECTORS' SHARE OPTIONS
<CAPTION>
MARKET
OPTIONS OPTIONS PRICE AT EARLIEST EXPIRY
HELD AT OPTIONS HELD AT EXERCISE DATE OF DATE OF DATE OF
1.1.96 EXERCISED 31.12.96 PRICE EXERCISE EXERCISE OPTION
------- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Employee Share Trust Options
T W Benson 800,000 (300,000) 500,000 2p 215p 31.12.94 30.12.98
T W Benson 400,000 -- 400,000 2p -- 15.11.96 14.11.00
I V Nash 200,000 (200,000) -- 2p 215p 31.12.94 30.12.98
I V Nash 200,000 -- 200,000 2p -- 15.11.96 14.11.00
</TABLE>
The market price of the company's shares at 31 December 1996 was 412.5p per
share (1995: 168.5p). During the year the highest market price was 425.5p per
share and the lowest was 168p per share.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
Company law requires the Directors to prepare accounts for each financial year
which give a true and fair view of the state of affairs of the group and the
company, and of the profit or loss of the group for that period. In preparing
those accounts, the Directors are required to:
* select suitable accounting policies and then apply them consistently;
* make judgements and estimates that are reasonable and prudent;
* state whether applicable accounting standards have been followed, subject to
any material departures disclosed and explained in the accounts; and
* prepare the accounts on the going concern basis unless it is inappropriate to
presume that the group will continue in business.
The Directors are responsible for keeping proper records which disclose with
reasonable accuracy at any time the financial position of the group and of the
company and to enable them to ensure that the accounts comply with the Companies
Act 1985. They are also responsible for safeguarding the assets of the group and
hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
MICHAEL PAGE GROUP PLC
12
<PAGE>
REPORT & ACCOUNTS 1996
REPORTS OF THE AUDITORS
TO THE SHAREHOLDERS OF MICHAEL PAGE GROUP PLC
We have audited the accounts on pages 14 to 29 which have been prepared under
the historical cost convention and the accounting policies set out on page 18.
We have also examined the disclosures relating to the emoluments and
shareholdings of the directors which form part of the report of the remuneration
committee on page 12.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described on page 12 the company's Directors are responsible for the
preparation of the accounts and it is our responsibility to form an independent
opinion, based on our audit, on those accounts and to report our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the accounts. It also
includes an assessment of the significant estimates and judgements made by the
Directors in the preparation of the accounts and of whether the accounting
policies are appropriate to the group's and company's circumstances,
consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the accounts are free from
material misstatement, whether caused by fraud or other irregularity or error.
In forming our opinion we also evaluated the overall adequacy of the
presentation of information in the accounts.
OPINION
In our opinion the accounts give a true and fair view of the state of affairs of
the group and of the company at 31 December 1996 and of the group's profit and
cash flows for the year then ended and have been properly prepared in accordance
with the Companies Act 1985.
ARTHUR ANDERSEN
Chartered Accountants and Registered Auditors, Reading 7 March 1997
TO MICHAEL PAGE GROUP PLC ON
CORPORATE GOVERNANCE MATTERS
In addition to our audit of the accounts, we have reviewed the Directors'
statement on page 10 on the company's compliance with the paragraphs of the
Cadbury Code of Best Practice specified for our review by the London Stock
Exchange. The objective of our review is to draw attention to non-compliance
with listing rules 12.43(j) and 12.43(r).
We carried out our review in accordance with guidance issued by the Auditing
Practices Board. That guidance does not require us to perform the additional
work necessary to, and we do not, express any opinion on the effectiveness of
either the company's system of internal financial control or its corporate
governance procedures nor on the ability of the company and group to continue in
operational existence.
OPINION
With respect to the Directors' statements on internal financial control and on
going concern on page 10, in our opinion the Directors have provided the
disclosures required by the listing rules referred to above and such statements
are not inconsistent with the information of which we are aware from our audit
work on the accounts.
Based on enquiry of certain Directors and officers of the company, and
examination of relevant documents, in our opinion the Directors' statement on
page 10 appropriately reflects the company's compliance with the other
paragraphs of the Code specified for our review by Listing Rule 12.43(j).
ARTHUR ANDERSEN
Chartered Accountants, Reading 7 March 1997
MICHAEL PAGE GROUP PLC
13
<PAGE>
REPORT & ACCOUNTS 1996
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 1996
1996 1995
Notes [L]'000 [L]'000
-------- -------- --------
TURNOVER ...................................... 2 142,144 103,783
Cost of sales ................................. (98,181) (74,592)
-------- -------- --------
GROSS PROFIT .................................. 43,963 29,191
Administrative expenses ....................... (15,106) (12,459)
-------- -------- --------
OPERATING PROFIT .............................. 28,857 16,732
Interest receivable ........................... 1,603 1,058
Interest payable .............................. 3 (20) (49)
-------- -------- --------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION . 6 30,440 17,741
Tax on profit on ordinary activities .......... 7 (10,660) (6,389)
-------- -------- --------
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION .. 19,780 11,352
Equity minority interests ..................... (313) (178)
-------- -------- --------
PROFIT ATTRIBUTABLE TO SHAREHOLDERS ........... 8 19,467 11,174
Dividends ..................................... 9 (5,588) (3,074)
-------- -------- --------
RETAINED PROFIT FOR THE YEAR .................. 19 13,879 8,100
-------- -------- --------
EARNINGS PER SHARE ............................ 10 31.47P 18.39 p
-------- -------- --------
STATEMENT OF TOTAL RECOGNISED-GAINS & LOSSES
FOR THE YEAR ENDED 31 DECEMBER 1996
1996 1995
[L]'000 [L]'000
-------- --------
Profit attributable to shareholders ...................... 19,467 11,174
Foreign currency translation differences ................. (1,831) 531
-------- --------
TOTAL RECOGNISED GAINS ................................... 17,636 11,705
-------- --------
The group's results for 1996 and 1995 derive entirely from its continuing
activities.
MICHAEL PAGE GROUP PLC
14
<PAGE>
REPORT & ACCOUNTS 1996
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 1996
1996 1995
Notes [L]'000 [L]'000
-------- -------- --------
FIXED ASSETS
Tangible assets ............................... 11 7,441 5,822
Investments ................................... 12 364 295
-------- -------- --------
7,805 6,117
-------- -------- --------
CURRENT ASSETS
Debtors ....................................... 13 23,678 18,206
Investments - short term deposits ............. 27,650 19,955
Cash .......................................... 13,312 6,382
-------- -------- --------
64,640 44,543
-------- -------- --------
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Borrowings .................................... 14 (4) (238)
Other creditors ............................... 15 (32,751) (23,595)
-------- -------- --------
(32,755) (23,833)
-------- -------- --------
NET CURRENT ASSETS ............................ 31,885 20,710
-------- -------- --------
TOTAL ASSETS LESS CURRENT LIABILITIES ......... 39,690 26,827
CREDITORS: AMOUNTS FALLING DUE AFTER ONE YEAR
Borrowings .................................... 14 (27) (32)
PROVISIONS FOR LIABILITIES AND CHARGES ........ 16 (357) (15)
-------- -------- --------
NET ASSETS .................................... 39,306 26,780
-------- -------- --------
CAPITAL & RESERVES
Called-up share capital ....................... 17 1,242 1,231
Share premium account ......................... 19 1,158 938
Other reserves ................................ 19 (662) (737)
Profit & loss account ......................... 19 35,587 23,419
-------- -------- --------
EQUITY SHAREHOLDERS' FUNDS .................... 20 37,325 24,851
Equity minority interests ..................... 1,981 1,929
-------- -------- --------
TOTAL CAPITAL EMPLOYED ........................ 39,306 26,780
-------- -------- --------
The accounts were approved by the Board of Directors on 7 March 1997:
TERRY BENSON, Chief Executive
IAN NASH, Finance Director
MICHAEL PAGE GROUP PLC
15
<PAGE>
REPORT & ACCOUNTS 1996
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 1996
1996 1995
Notes [L]'000 [L]'000
-------- -------- --------
NET CASH INFLOW FROM OPERATING ACTIVITIES ..... 21 30,021 17,506
Returns on investments and servicing of
finance ..................................... 22 1,583 984
Taxation ...................................... (7,166) (3,313)
Capital expenditure and financial investment .. 22 (4,462) (3,107)
Equity dividends paid ......................... (3,639) (1,993)
-------- -------- --------
NET CASH INFLOW BEFORE USE OF LIQUID .......... 16,337 10,077
RESOURCES AND FINANCING
Management of liquid resources ................ 22 (8,203) (8,257)
Financing ..................................... 22 (8) 589
-------- -------- --------
INCREASE IN CASH .............................. 23 8,126 2,409
-------- -------- --------
RECONCILIATION OF NET CASH FLOW
TO MOVEMENT IN NET CASH BALANCES
1996 1995
[L]'000 [L]'000
-------- --------
Increase in cash .................................... 8,126 2,409
Purchase of short term deposits ..................... 8,203 8,257
Repayments under finance leases ..................... 239 243
-------- --------
CHANGE IN NET CASH RESULTING FROM CASH FLOWS ........ 16,568 10,909
Translation differences ............................. (1,704) 431
-------- --------
MOVEMENT IN NET CASH IN YEAR ........................ 14,864 11,340
Net cash at 1 January 1996 .......................... 26,067 14,727
-------- --------
NET CASH AT 31 DECEMBER 1996 ........................ 40,931 26,067
-------- --------
MICHAEL PAGE GROUP PLC
16
<PAGE>
REPORT & ACCOUNTS 1996
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 1996
1996 1995
Notes [L]'000 [L]'000
-------- -------- --------
FIXED ASSETS
Tangible assets ............................... 11 190 130
Investments ................................... 12 2,662 2,593
-------- -------- --------
2,852 2,723
-------- -------- --------
CURRENT ASSETS
Debtors ....................................... 13 2,495 2,070
Investments - short term deposits ............. 25,500 16,430
Cash .......................................... 2,487 25
-------- -------- --------
30,482 18,525
-------- -------- --------
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Borrowings .................................... 14 (195) (19)
Other creditors ............................... 15 (24,835) (16,444)
-------- -------- --------
(25,030) (16,463)
-------- -------- --------
NET CURRENT ASSETS ............................ 5,452 2,062
-------- -------- --------
TOTAL ASSETS LESS CURRENT LIABILITIES ......... 8,304 4,785
PROVISIONS FOR LIABILITIES AND CHARGES ........ 16 (25) (8)
-------- -------- --------
NET ASSETS .................................... 8,279 4,777
-------- -------- --------
CAPITAL & RESERVES
Called-up share capital ....................... 17 1,242 1,231
Share premium account ......................... 19 1,158 938
Other reserves ................................ 19 1,156 1,156
Profit & loss account ......................... 19 4,723 1,452
-------- -------- --------
EQUITY SHAREHOLDERS' FUNDS .................... 20 8,279 4,777
-------- -------- --------
The accounts were approved by the Board of Directors on 7 March 1997:
TERRY BENSON, Chief Executive
IAN NASH, Finance Director
MICHAEL PAGE GROUP PLC
17
<PAGE>
REPORT & ACCOUNTS 1996
NOTES TO THE ACCOUNTS
FOR YEAR ENDED 31 DECEMBER 1996
1. ACCOUNTING POLICIES
The principal accounting policies adopted in preparing these accounts, all of
which have been applied consistently throughout the year and the preceding year
are as follows:
a) BASIS OF ACCOUNTING
The accounts have been prepared under the historical cost convention, and in
compliance with applicable accounting standards.
b) BASIS OF CONSOLIDATION
The Michael Page Group accounts consolidate the results of Michael Page Group
PLC and all its subsidiary undertakings. Goodwill arising on consolidation
(representing the excess of the fair value of the consideration given over
the fair value of the separable net assets acquired) is written off against
reserves on acquisition.
c) FOREIGN EXCHANGE
Assets and liabilities in foreign currencies are translated into sterling at
the rates of exchange ruling at the balance sheet date. Transactions in
foreign currencies are converted at rates of exchange prevailing at the date
the transactions were made. Differences arising from changes in exchange
rates on trading transactions are dealt with through the profit and loss
account. Accounts of overseas operations are translated using the closing
rate method. Profits, losses and cash flows of overseas operations are
translated at the average exchange rate applicable to the period. Net
differences arising on the translation of the accounts of overseas operations
are dealt with through reserves.
d) TANGIBLE FIXED ASSETS
Tangible fixed assets are stated at original cost less accumulated
depreciation. Depreciation is calculated to write off the cost less estimated
residual value of each asset evenly over its expected useful life at the
following rates:
Leasehold improvements - 10% p.a. or period of lease if shorter
Furniture, fittings and equipment - 10-20% p.a.
Motor vehicles - 25% p.a.
e) LEASED ASSETS
Assets held under finance leases and hire purchase contracts are capitalised
and depreciated over the shorter of the lease terms and their useful lives at
the rates applicable to fixed assets of a similar category owned by the
group. Rentals under operating leases are charged on a straight line basis
over the term of the lease.
f) INVESTMENTS
Fixed asset investments are shown at cost less amounts written off.
Provisions are made for permanent diminution in value.
g) TURNOVER
Recruitment consultancy turnover represents fee income and expenses
chargeable to clients, excluding VAT.
h) INCOME RECOGNITION
Fee income on retained assignments is recognised on completion of defined
stages of work. Income on non-retained assignments (which is dependent upon
the successful completion of the assignment) is recognised when the position
of employment is accepted by the candidate. This normally precedes the
invoice date which approximates the date when the position of employment is
started. These amounts are included within accrued income in the balance
sheet. Provision is made for withdrawals prior to, or shortly after, the
commencement of employment.
i) TAXATION
Corporation tax is provided on taxable profits at the current rate. Provision
is made for deferred taxation on all material timing differences to the
extent that it is probable that a liability or asset will crystallise. The
provision is calculated on the liability method at the rates of tax likely to
be in force at the time of reversal of the timing differences. No provision
is made for taxation liabilities that may arise if the retained profits of
overseas operations were remitted to the United Kingdom.
j) PENSION COSTS
The group operates a defined contribution pension scheme. The assets of the
scheme are held separately from those of the group in an independently
administered fund. The pension costs charged in the year represent
contributions payable by the group to the fund.
MICHAEL PAGE GROUP PLC
18
<PAGE>
REPORT & ACCOUNTS 1996
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1996
2. SEGMENT INFORMATION
<TABLE>
<CAPTION>
1996 1995
TURNOVER PROFIT NET Turnover Profit Net
BY ORIGIN BEFORE TAX ASSETS By Origin Before Tax Assets
[L]'000 [L]'000 [L]'000 [L]'000 [L]'000 [L]'000
--------- ---------- ------- --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Geographical Area:
UK 87,369 19,517 26,288 65,063 11,011 16,000
Australia 20,993 3,125 3,900 14,531 1,612 2,143
France 16,781 3,994 6,787 12,168 2,820 5,311
Benelux 11,315 2,988 1,684 8,211 1,975 3,210
Germany 2,354 297 384 2,333 223 261
Hong Kong 3,231 695 426 1,477 100 (145)
Singapore 101 (176) (163) - - -
--------- ---------- ------- --------- ---------- -------
142,144 30,440 39,306 103,783 17,741 26,780
--------- ---------- ------- --------- ---------- -------
</TABLE>
Turnover analysed by destination in 1996 and 1995 is not materially different
to turnover analysed by origin. The amounts stated above derive from the
group's activity of recruitment consultancy.
3. INTEREST PAYABLE
1996 1995
[L]'000 [L]'000
------- -------
Interest payable on:
Bank overdrafts ........................................... 5 9
Finance leases ............................................ 15 40
------- -------
20 49
------- -------
4. EMPLOYEE INFORMATION
1996 1995
Number Number
------- -------
The average number of employees (including Executive
Directors) during the year were: ......................... 734 553
1996 1995
[L]'000 [L]'000
------- -------
Employment costs in the year comprised:
Wages and salaries ....................................... 26,957 19,796
Social security costs .................................... 3,150 2,471
Other pension costs ...................................... 696 557
------- -------
30,803 22,824
------- -------
There were no outstanding contributions payable to the pension fund at the
year end (1995: [L]Nil).
MICHAEL PAGE GROUP PLC
19
<PAGE>
REPORT & ACCOUNTS 1996
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1996
5. DIRECTORS
DIRECTORS' EMOLUMENTS:
1996 1995
TOTAL Total
[L]'000 [L]'000
------- -------
Directors' emoluments ................................ 349 435
Performance related bonuses .......................... 356 355
Pension contributions ................................ 29 28
------- -------
734 818
------- -------
BANDING OF DIRECTORS' REMUNERATION:
1996 1995
NUMBER Number
------- -------
[L] 10,001 to [L] 15,000 ............................. 1 2
[L] 20,001 to [L] 25,000 ............................. -- 1
[L] 30,001 to [L] 35,000 ............................. 1 --
[L] 80,001 to [L]185,000 ............................. -- 1
[L]215,001 to [L]220,000 ............................. -- 1
[L]255,001 to [L]260,000 ............................. 1 --
[L]340,001 to [L]345,000 ............................. -- 1
[L]400,001 to [L]405,000 ............................. 1 --
The above figures for remuneration do not include any amounts for the value
of share options granted to or held by Directors.
6. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
1996 1995
[L]'000 [L]'000
------- -------
Profit on ordinary activities before taxation is stated after charging:
Depreciation of tangible fixed assets - owned ........... 1,856 1,570
Depreciation of tangible fixed assets - leased .......... 153 123
Auditors' remuneration - audit work ..................... 148 144
Auditors' remuneration - non audit services ............. 137 242
Operating lease rentals for property .................... 2,751 2,519
Operating lease rentals for equipment ................... 126 87
(Profit)/Loss on disposal of fixed assets ............... (146) 45
MICHAEL PAGE GROUP PLC
20
<PAGE>
REPORT & ACCOUNTS 1996
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1996
7. TAX ON PROFIT ON ORDINARY ACTIVITIES
1996 1995
[L]'000 [L]'000
------- -------
Current year taxation:
UK corporation tax ...................................... 6,351 3,921
Overseas corporation tax ................................ 3,841 2,381
Deferred taxation ....................................... 494 94
------- -------
10,686 6,396
------- -------
Prior year adjustments:
UK corporation tax ...................................... 132 60
Overseas corporation tax ................................ (14) 7
Deferred taxation ....................................... (144) (74)
------- -------
(26) (7)
------- -------
10,660 6,389
------- -------
8. PROFIT ATTRIBUTABLE TO SHAREHOLDERS
Of the group's profit for the year [L]8,859,000 (1995: [L]3,181,000) has been
dealt with in the accounts of the parent company.
As permitted by section 230(4) of the Companies Act 1985, the company's
profit and loss account has not been included in these accounts.
9. DIVIDENDS
1996 1995
[L]'000 [L]'000
------- -------
Interim paid: 2p per ordinary share (1995: 1.1p) ......... 1,240 674
Final proposed: 7p per ordinary share (1995: 3.9p) ...... 4,348 2,400
------- -------
5,588 3,074
------- -------
10. EARNINGS PER SHARE
Earnings per share are calculated on the basis of profit on ordinary
activities after taxation and minority interests, and the weighted average
number of ordinary shares in issue throughout the year of 61,853,697 (1995:
60,761,400).
The potential dilution of earnings per share from the exercise of share
options is not material.
MICHAEL PAGE GROUP PLC
21
<PAGE>
REPORT & ACCOUNTS 1996
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1996
11. TANGIBLE FIXED ASSETS
Fixtures
Leasehold fittings & Motor
improvements equipment vehicles Total
[L]'000 [L]'000 [L]'000 [L]'000
------------ ---------- -------- -----------
GROUP
Cost
At 1 January 1996 ....... 1,778 6,398 3,103 11,279
Additions ............... 498 1,833 2,132 4,463
Disposals ............... (43) (57) (1,197) (1,297)
Exchange adjustment ..... (70) (327) (134) (531)
------------ ---------- -------- -----------
At 31 December 1996 ..... 2,163 7,847 3,904 13,914
------------ ---------- -------- -----------
Depreciation
At 1 January 1996 ....... 927 3,567 963 5,457
Charge for the year ..... 229 960 820 2,009
Disposals ............... (43) (44) (545) (632)
Exchange adjustment ..... (40) (253) (68) (361)
------------ ---------- -------- -----------
At 31 December 1996 ..... 1,073 4,230 1,170 6,473
------------ ---------- -------- -----------
Net book value:
At 31 December 1996 ..... 1,090 3,617 2,734 7,441
------------ ---------- -------- -----------
At 31 December 1995 ..... 851 2,831 2,140 5,822
------------ ---------- -------- -----------
Included above in the group's motor vehicles are assets held under finance
leases with a net book value of [L]36,000 (1995: [L]189,000).
COMPANY
COST
At 1 January 1996 ...... 33 70 150 253
Additions .............. -- 37 89 126
Disposals .............. -- (5) (36) (41)
------------ ---------- -------- -----------
At 31 December 1996 .... 33 102 203 338
------------ ---------- -------- -----------
Depreciation
At 1 January 1996 ...... 11 45 67 123
Charge for the year .... 3 9 39 51
Disposals .............. -- (5) (21) (26)
------------ ---------- -------- -----------
At 31 December 1996 .... 14 49 85 148
------------ ---------- -------- -----------
Net book value:
AT 31 DECEMBER 1996 .... 19 53 118 190
------------ ---------- -------- -----------
At 31 December 1995 .... 22 25 83 130
------------ ---------- -------- -----------
The company holds no assets under finance leases.
MICHAEL PAGE GROUP PLC
22
<PAGE>
REPORT & ACCOUNTS 1996
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1996
12. FIXED ASSET INVESTMENTS
<TABLE>
<CAPTION>
GROUP COMPANY
------------ -------------------------------------------
OWN SUBSIDIARY OWN
SHARES UNDERTAKINGS SHARES TOTAL
[L]'000 [L]'000 [L]'000 [L]'000
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cost
At 1 January 1996 ........... 295 2,298 295 2,593
Additions ................... 810 -- 810 810
Expensed in year ............ (741) -- (741) (741)
------------ ------------ ------------ ------------
At 31 December 1996 ......... 364 2,298 364 2,662
------------ ------------ ------------ ------------
</TABLE>
The own shares above are held under an Employee Share Trust as detailed in
note 18.
The company's principal subsidiary undertakings are detailed below. All
holdings are of ordinary share capital. All subsidiary undertakings operate
as recruitment consultancies in their country of incorporation. The
investments are held through intermediate subsidiary undertakings.
<TABLE>
<CAPTION>
COUNTRY OF PERCENTAGE
NAME OF UNDERTAKING INCORPORATION HOLDING NOTE
------------------------------------------------- ------------- ---------- ----
<S> <C> <C> <C>
Accountancy Additions Ltd ....................... Great Britain 90% (i)
Michael Page Ltd ................................ Great Britain 100%
Michael Page UK Ltd ............................. Great Britain 100%
Questor International Ltd ....................... Great Britain 100%
Sales Recruitment Specialists Ltd ............... Great Britain 100%
The Page Partnership Ltd ........................ Great Britain 100%
Michael Page International (Australia) Pty Ltd... Australia 90% (ii)
Michael Page International (France) SA .......... France 95% (ii)
Page Interim SA ................................. France 100%
Michael Page International (Nederland) BV ....... Netherlands 100%
Michael Page International (Deutschland) GmbH.... Germany 100%
Michael Page International (Hong Kong) Ltd ...... Hong Kong 100%
<FN>
Notes
(i) The minority shareholding is owned by two of the Directors of the
business. An agreement exists between these Directors and the Michael Page
Group PLC whereby the company will purchase their equity holdings in the
year 2000, for a consideration based on a multiple of the average profits
of the years ending 31 December 1998 and 1999.
(ii) The minority shareholdings are owned by the Managing Directors of the
businesses. Agreements exist between the Managing Directors and the Michael
Page Group PLC whereby the company will purchase their equity holdings in
1997, for considerations based on a multiple of the average profits of the
years ended 31 December 1995 and 1996. These amounts have been provided for
within minority interests in the consolidated balance sheet.
</TABLE>
MICHAEL PAGE GROUP PLC
23
<PAGE>
REPORT & ACCOUNTS 1996
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1996
13. DEBTORS
GROUP COMPANY
---------------- ----------------
1996 1995 1996 1995
[L]'000 [L]'000 [L]'000 [L]'000
------- ------- ------- -------
AMOUNTS FALLING DUE WITHIN ONE YEAR:
Trade debtors .......................... 18,479 14,733 -- --
Amounts owed by subsidiary undertakings. -- -- 2,320 1,996
Other debtors .......................... 267 152 79 5
Prepayments and accrued income ......... 4,805 3,233 96 69
------- ------- ------- -------
23,551 18,118 2,495 2,070
------- ------- ------- -------
AMOUNTS FALLING DUE AFTER ONE YEAR:
Other debtors .......................... 127 88 -- --
------- ------- ------- -------
23,678 18,206 2,495 2,070
------- ------- ------- -------
14. BORROWINGS
GROUP COMPANY
---------------- ----------------
1996 1995 1996 1995
[L]'000 [L]'000 [L]'000 [L]'000
------- ------- ------- -------
AMOUNTS FALLING DUE WITHIN ONE YEAR:
Bank overdrafts ........................ -- -- 195 19
Finance lease and hire purchase
liabilities .......................... 4 238 -- --
------- ------- ------- -------
4 238 195 19
------- ------- ------- -------
AMOUNTS FALLING DUE AFTER ONE YEAR:
Finance lease and hire purchase
liabilities:
- due between two and five years ....... 27 32 -- --
------- ------- ------- -------
31 270 195 19
------- ------- ------- -------
MICHAEL PAGE GROUP PLC
24
<PAGE>
REPORT & ACCOUNTS 1996
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1996
15. CREDITORS
GROUP Company
------- ------- ------- -------
1996 1995 1996 1995
[L]'000 [L]'000 [L]'000 [L]'000
------- ------- ------- -------
AMOUNTS FALLING DUE WITHIN ONE YEAR:
Trade creditors ........................ 2,994 1,766 186 52
Amounts owed to subsidiary undertakings -- -- 18,293 12,396
Corporation tax payable ................ 7,571 5,184 291 223
ACT payable ............................ 1,332 841 78 --
Other tax and social security .......... 6,196 5,047 317 276
Proposed dividends ..................... 4,348 2,400 4,348 2,400
Other creditors ........................ 929 1,160 71 67
Accruals and deferred income ........... 9,381 7,197 1,251 1,030
------- ------- ------- -------
32,751 23,595 24,835 16,444
------- ------- ------- -------
16. PROVISIONS FOR LIABILITIES AND CHARGES
GROUP COMPANY
---------------- ----------------
1996 1995 1996 1995
[L]'000 [L]'000 [L]'000 [L]'000
------- ------- ------- -------
DEFERRED TAXATION:
At 1 January 1996 ...................... 15 -- 8 195
Charge for the year .................... 350 20 17 (187)
Exchange adjustment .................... (8) (5) -- --
------- ------- ------- -------
AT 31 DECEMBER 1996 .................... 357 15 25 8
------- ------- ------- -------
Deferred taxation is attributable to:
Capital allowances in excess of
depreciation ......................... 211 82 (8) (8)
Other timing differences ............... 146 (67) 33 16
------- ------- ------- -------
357 15 25 8
------- ------- ------- -------
All material deferred taxation balances have been fully provided within
these accounts.
MICHAEL PAGE GROUP PLC
25
<PAGE>
REPORT & ACCOUNTS 1996
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1996
17. CALLED-UP SHARE CAPITAL
1996 1995
[L]'000 [L]'000
------- -------
Authorised:
80,000,000 Ordinary Shares of 2p each .................... 1,600 1,600
1 Cumulative Redeemable Preference Share ................. 50 50
------- -------
1,650 1,650
------- -------
Allotted, called-up and fully paid:
62,108,492 Ordinary Shares (1995: 61,533,492) of 2p each . 1,242 1,231
------- -------
During the year the company issued 575,000 ordinary shares on the exercise
of share options as detailed in note 18.
18. SHARE OPTIONS
EXECUTIVE SHARE OPTION SCHEME
Under the Michael Page Group Executive Share Option Scheme options were
granted during the year on 900,000 ordinary shares at a price of 204.5p
exercisable between 23 April 1999 and 22 April 2006. During the year 325,000
share options were exercised, 225,000 at 41.5p per share and 100,000 at
37.5p per share. At 31 December 1996 options amounting to 1,446,034 ordinary
shares remained outstanding, exercisable between 27 June 1991 and 22 April
2006 at a price between 52p and 204.5p per share.
OVERSEAS SHARE OPTION SCHEME
Under the Michael Page Group Overseas Share Option Scheme options were
granted during the year on 200,000 ordinary shares at a price of 204.5p
exercisable between 23 April 1999 and 22 April 2006. During the year 250,000
share options were exercised, 200,000 at 35.5p per share and 50,000 at 60.5p
per share. At 31 December 1996 options amounting to 580,000 ordinary shares
remained outstanding, exercisable between 6 October 1996 and 22 April 2006
at a price between 60.5p and 204.5p per share.
EMPLOYEE SHARE TRUST OPTION SCHEME
The group has established two Employee Share Trusts (ESOPs) for the purpose
of purchasing shares in the company on the open market, which are
subsequently awarded to senior employees and directors under a share option
scheme on a discretionary basis by the trustees. The ESOPs are fully funded
by the group, and consequently have no external borrowings.
During the year the ESOPs purchased 200,000 ordinary shares in the company
at 405p per share and granted options over 300,000 ordinary shares to senior
employees. As at 31 December 1996 the ESOPs held a total of 2,091,828
ordinary shares, of which 1,700,000 ordinary shares have been placed under
option to senior employees and directors at a price of 2p per share,
exercisable between 31 December 1994 and 16 December 2003. The market price
of the company's shares at 31 December 1996 was 412.5p per share.
A total of [L]637,907 (1995: [L]295,214) has been charged to the
consolidated profit and loss account in respect of the cost of share options
granted by the trust in the year, together with the income and
administration expenses of the group's ESOPs. The ESOPs have not waived
dividend income from the company.
The total value of net assets of the ESOPs included within the consolidated
balance sheet at 31 December 1996 are [L]468,359 (1995: [L]295,266).
MICHAEL PAGE GROUP PLC
26
<PAGE>
REPORT & ACCOUNTS 1996
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1996
19. RESERVES
GROUP
-----------------------------
Share Profit
Premium Other &-Loss
Account Reserves Account
[L]'000 [L]'000 [L]'000
-------- -------- ---------
At 1 January 1996 ...................... 938 (737) 23,419
Retained profit for year ............... -- -- 13,879
Share premium arising in year .......... 220 -- --
Goodwill adjustment .................... -- 195 --
Exchange adjustment .................... -- (120) (1,711)
-------- -------- ---------
At 31 December 1996 .................... 1,158 (662) 35,587
-------- -------- ---------
Estimates of amounts of contingent consideration payable for the purchase of
shares held by minority shareholders are included in the calculation of
goodwill when the director's believe that they can assess the amounts
payable with reasonable certainty. The goodwill adjustment arising in the
year represents the difference between the current estimate and previous
estimates of that cost.
The cumulative amount of goodwill written off against the group's reserves
is [L]1,628,000 (1995: [L]1,823,000).
COMPANY
-----------------------------
SHARE PROFIT
PREMIUM OTHER & LOSS
ACCOUNT RESERVES ACCOUNT
[L]'000 [L]'000 [L]'000
-------- -------- ---------
At 1 January 1996 ........................ 938 1,156 1,452
Retained profit for the year ............. -- -- 3,271
Share premium arising in the year ........ 220 -- --
-------- -------- ---------
AT 31 DECEMBER 1996 ...................... 1,158 1,156 4,723
-------- -------- ---------
Other Reserves of the company are non-distributable.
MICHAEL PAGE GROUP PLC
27
<PAGE>
REPORT & ACCOUNTS 1996
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1996
20. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
GROUP COMPANY
----------------- -----------------
1996 1995 1996 1995
[L]'000 [L]'000 [L]'000 [L]'000
------- ------- ------- -------
Profit attributable to shareholders. 19,467 11,174 8,859 3,182
Dividends .......................... (5,588) (3,074) (5,588) (3,091)
------- ------- ------- -------
13,879 8,100 3,271 91
Exchange adjustment ................ (1,831) 531 -- --
Goodwill written off in year ....... 195 (1,457) -- --
Shares issued in year .............. 231 832 231 832
------- ------- ------- -------
Net addition to shareholders' funds. 12,474 8,006 3,502 923
Opening shareholders' funds ........ 24,851 16,845 4,777 3,854
------- ------- ------- -------
Closing shareholders' funds ........ 37,325 24,851 8,279 4,777
------- ------- ------- -------
21. RECONCILIATION OF OPERATING PROFIT TO
OPERATING NET CASH FLOWS
1996 1995
[L]'000 [L]'000
------- -------
Operating profit .................................. 28,857 16,732
Depreciation ...................................... 2,009 1,693
Own shares expensed ............................... 741 383
(Profit)/Loss on disposal of fixed assets ......... (146) 45
Increase in debtors ............................... (6,581) (4,676)
Increase in creditors ............................. 5,141 3,329
------- -------
30,021 17,506
------- -------
22. GROSS CASH FLOWS
1996 1995
[L]'000 [L]'000
------- -------
Interest received ................................. 1,603 1,034
Interest paid ..................................... (5) (10)
Interest element of finance lease payments ........ (15) (40)
------- -------
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE.... 1,583 984
------- -------
Purchase of tangible fixed assets ................. (4,463) (3,158)
Sale of tangible fixed assets ..................... 811 633
Purchase of shares by ESOP trust .................. (810) (582)
------- -------
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT ...... (4,462) (3,107)
------- -------
Purchase of short term deposits ................... (8,203) (8,257)
------- -------
MANAGEMENT OF LIQUID RESOURCES .................... (8,203) (8,257)
------- -------
Issue of ordinary shares .......................... 231 832
Repayments under finance leases ................... (239) (243)
------- -------
FINANCING ......................................... (8) 589
------- -------
MICHAEL PAGE GROUP PLC
28
<PAGE>
REPORT & ACCOUNTS 1996
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1996
23. ANALYSIS OF NET CASH BALANCES
<TABLE>
<CAPTION>
At Cash Translation AT
1.1.96 Flows Differences 31.12.96
[L]'000 [L]'000 [L]'000 [L]'000
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cash in hand and at bank ........ 6,382 8,126 (1,196) 13,312
Finance leases .................. (270) 239 -- (31)
Short term deposits ............. 19,955 8,203 (508) 27,650
----------- ----------- ----------- -----------
NET CASH ........................ 26,067 16,568 (1,704) 40,931
----------- ----------- ----------- -----------
</TABLE>
24. CAPITAL COMMITMENTS
Capital commitments for which no provision has been made in these accounts
were:
GROUP COMPANY
---------------- ----------------
1996 1995 1996 1995
[L]'000 [L]'000 [L]'000 [L]'000
------- ------- ------- -------
Contracted for but not provided ........ 138 163 -- --
------- ------- ------- -------
25. OPERATING LEASE COMMITMENTS
Annual commitments under non-cancellable operating leases were:
GROUP COMPANY
---------------- ----------------
1996 1995 1996 1995
[L]'000 [L]'000 [L]'000 [L]'000
------- ------- ------- -------
Leases in respect of property expiring:
- within one year ....................... 73 147 -- --
- in two to five years .................. 1,396 735 -- --
- after five years ...................... 1,904 1,688 -- --
------- ------- ------- -------
3,373 2,570 -- --
------- ------- ------- -------
Leases in respect of equipment expiring:
- within one year ....................... 7 23 -- --
- in two to five years .................. 95 46 -- --
- after five years ...................... 8 -- -- --
------- ------- ------- -------
110 69 -- --
------- ------- ------- -------
26. GUARANTEES AND CONTINGENT LIABILITIES
VAT GROUP REGISTRATION
As a result of group registration for VAT purposes, the company is
contingently liable for VAT liabilities arising in other companies within
the VAT group which at the end of the year amounted to [L]2,849,979 (1995:
[L]1,946,585).
BANK CROSS-GUARANTEES
In the normal course of business the company has given cross-guarantees to
its bankers in respect of overdraft facilities granted to certain
subsidiaries. There was no contingent liability in respect of these
guarantees as at 31 December 1996 (1995: [L]nil).
MICHAEL PAGE GROUP PLC
29
<PAGE>
REPORT & ACCOUNTS 1996
MICHAEL PAGE GROUP PLC
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the eighth Annual General Meeting of Michael Page
Group PLC will be held at 12.00 noon on Wednesday 14 May 1997 at 39-41 Parker
Street, London WC2B 5LH, for the following purposes:
ORDINARY BUSINESS
1. To receive and adopt the accounts of the company for the year ended 31
December 1996 and the Directors' and auditors' reports thereon.
2. To approve the final dividend of 7p (net) per ordinary share, payable on 23
May 1997.
3. To re-elect as a Director Michael Andrews who retires by rotation and, being
eligible, offers himself for re-election.
4. To re-appoint Arthur Andersen to hold office as auditors until the next
Annual General Meeting.
5. To authorise the Directors to fix the auditors' remuneration.
SPECIAL BUSINESS
6. To consider and, if thought fit, to pass the following Resolution which will
be proposed as an Ordinary Resolution:
THAT the Directors be and are hereby generally and unconditionally
authorised to exercise all the powers of the company to allot relevant
securities (within the meaning of Section 80(2) of the Companies Act 1985,
"the Act") up to an aggregate nominal amount of [L]357,830 provided that
such authority shall expire at the conclusion of the Annual General Meeting
of the company to be held in 1998 or the expiration of the period of 15
months from the date of passing this Resolution, whichever is the earlier,
save that the company may before such expiry make an offer or agreement
which would or might require relevant securities to be allotted after such
expiry and the Directors may allot relevant securities in pursuance of such
offer or agreement as if the authority had not expired and provided further
that this authority shall be in substitution for and to the exclusion of the
like authority conferred on the Directors by a Resolution passed at last
year's Annual General Meeting.
7. To consider and, if thought fit, to pass the following Resolution which will
be proposed as a Special Resolution:
THAT the Directors be and are hereby empowered pursuant to Section 95 of the
Act to allot equity securities (within the meaning of Section 94(2) of the
Act) wholly for cash pursuant to the authority conferred by Resolution 6
above as if sub-section (1) of Section 89 of the Act did not apply to such
allotment provided that this power shall be limited:
i. to the allotment of equity securities in connection with a rights issue
in favour of holders of ordinary shares where the equity securities
respectively attributable to the interests of all holders of ordinary shares
on a fixed record date are proportionate (as nearly as may be) to the
respective number of ordinary shares held by them but subject to such
exclusions or other arrangements as the Directors may deem necessary or
expedient in relation to fractional entitlements or any legal or practical
problems under the laws of any overseas territory or the requirements of any
regulatory body or stock exchange; and
ii. to the allotment, (otherwise than pursuant to sub-paragraph (i) above)
of equity securities up to an aggregate nominal amount of [L]62,108.
Such power shall expire at the conclusion of the Annual General Meeting of
the company to be held in 1998 or on the expiration of the period of 15
months from the date of passing this Resolution, whichever is the earlier,
save that the company may before such expiry make an offer or agreement
which would or might require equity securities to be allotted after such
expiry and the Directors may allot equity securities pursuant to such an
offer or agreement as if the power conferred had not expired.
MICHAEL PAGE GROUP PLC
30
<PAGE>
REPORT & ACCOUNTS 1996
MICHAEL PAGE GROUP PLC
NOTICE OF ANNUAL GENERAL MEETING
8. To consider and, if thought fit, to pass the following Resolution which will
be proposed as a Special Resolution:
THAT the company be and is hereby authorised pursuant to Article 1(N) of the
company's Articles of Association to make market purchases (as defined in
Section 163(3) of the Act) of ordinary shares of 2p each in the capital of
the company ("ordinary shares") provided that:
i. the maximum aggregate number of ordinary shares hereby authorised to be
purchased is 8,900,000; and
ii. the minimum price which may be paid for such shares is the par value of
such shares from time to time and the maximum price which may be paid for
such shares is not more than 5 per cent above the average of the middle
market quotations taken from the London Stock Exchange Daily Official List
for the five dealing days before the purchase is made, in each case
exclusive of advance corporation tax and expenses; and
iii. the authority hereby conferred shall expire at the earlier of 30 June
1998 and the date of the 1998 Annual General Meeting of the company; and
iv. the company may make a contract to purchase its own shares under the
authority hereby conferred prior to the expiry of such authority which will
or may be executed wholly or partly after the expiry of such authority, and
may make a purchase of its own shares in pursuance of such contract.
By Order of the Board of Directors
Ian Nash, Secretary
39-41 Parker Street
London WC2B 5LH
7 March 1997
A member entitled to attend and vote at the Meeting is entitled to appoint one
or more proxies to attend and, on a poll, vote in his stead. A proxy need not be
a member of the company.
The instrument appointing a proxy and the power of attorney or other authority
(if any) under which it is signed must be deposited at the offices of the
Registrar of the company, Independent Registrars Group Limited, Balfour House,
390/398 High Road, Ilford, Essex IG1 1NQ not less than 48 hours before the time
for the holding of the Meeting.
Details of Directors' interests are shown in the Director's Report on page 8.
There will be available for inspection at the registered office of the company
during the usual business hours on any weekday (Saturdays and public holidays
excluded) from the date of this notice until the date of the Annual General
Meeting and at the place of the Annual General Meeting from at least 15 minutes
prior to and until the conclusion of the Annual General Meeting (a) copies of
the Directors' service contracts with the company or any of its subsidiaries and
(b) the Register of Directors' interests.
MICHAEL PAGE GROUP PLC
31
<PAGE>
<TABLE>
REPORT & ACCOUNTS 1996
OFFICES
MICHAEL PAGE UK
<C> <C> <C>
LONDON ETON MANCHESTER
Page House Windsor Bridge House Clarendon House
39-41 Parker Street 1 Brocas Street 81 Mosley Street
London WC2B 5LH Eton SL4 6BW Manchester M2 3LQ
Tel: 0171 831 2000 Tel: 01753 833752 Tel: 0161 228 0396
Fax: 0171 831 2612 Fax: 01753 830889 Fax: 0161 236 6961
Savannah House
11-12 Charles II Street GLASGOW MILTON KEYNES
London SW1Y 4QZ 150 West George Street 214 Silbury Boulevard
Tel: 0171 831 2000 Glasgow G2 2HG Milton Keynes
Fax: 0171 839 8086 Tel: 0141 331 2597 Bucks MK9 1LT
Fax: 0141 331 1426 Tel: 01908 692611
Fax: 01908 692488
BIRMINGHAM LEATHERHEAD NOTTINGHAM
The Citadel Cygnet House Imperial Building
190 Corporation Street 45-47 High Street 20 Victoria Street
Birmingham B4 6QD Leatherhead KT22 8AG Nottingham NG1 2EX
Tel: 0121 625 3380 Tel: 01372 375661 Tel: 0115 948 3480
Fax: 0121 625 3378 Fax: 01372 370101 Fax: 0115 941 0125
Bennetts Court
6 Bennetts Hill LEEDS READING
Birmingham B2 5ST Leigh House 33 Blagrave Street
Tel: 0121 233 4633 28-32 St Pauls Street Reading RG1 1PW
Fax: 0121 236 4456 Leeds LS1 2PX Tel: 01189 509671
Tel: 0113 246 9155 Fax: 01189 561657
Fax: 0113 243 3177
BRISTOL Aquis House ST. ALBANS
29 St. Augustine's Parade 12 Greek Street Centurion House
Bristol BS1 4UL Leeds LS1 5RU 136-142 London Road
Tel: 0117 927 6509 Tel: 0113 242 3530 St.-Albans AL1 1SA
Fax: 0117 926 4223 Fax: 0113 242 4067 Tel: 01727 865813
Fax: 01727 841616
EDINBURGH MAIDENHEAD
82 Great King Street 40-42 High Street
Edinburgh EH3 6QU Maidenhead
Tel: 0131 225 9116 Berkshire SL6 1QE
Tel: 01628 771604
Fax: 01628 785495
MICHAEL PAGE INTERNATIONAL
AUSTRALIA BENELUX GERMANY
Level 19 Apollo House Graf-Adolf-Strasse 70
1 York Street Gerrit van der Veenstraat 9 40210 Dusseldorf
Sydney NSW 2000 1077 DM-Amsterdam Tel: 00 49 211 17 72 20
Tel: 00 612 9235 1488 Tel: 00 31 20 578 9444 Fax: 00 49 211 17 72 22
Fax: 00 612 9251 1444 Fax: 00 31 20 578 9440
Level 10 Heuvelgalerie Mainzer Landstrasse 39
600 Bourke Street Ten Hagestraat 10 60329 Frankfurt
Melbourne 5611 EG-Eindhoven Tel: 00 49 69 2426 180
Victoria 3000 Tel: 00 31 40 243 3735 Fax: 00 49 69 2426 1818
Tel: 00 613 9600 1633 Fax: 00 31 40 243 7310
Fax: 00 613 9602 5990
Level 5 FRANCE HONG KONG
99 Phillip Street 3 Boulevard Bineau 601 One Pacific Place
Parramatta NSW 2150 92300 Levallois-Perret, Paris 88 Queensway
Tel: 00 612 893 7700 Tel: 00 331 47 57 2424 Hong Kong
Fax: 00 612 893 7733 Fax: 00 331 47 57 3918 Tel: 00 852 2530 2000
Fax: 00 852 2530 2255
SPAIN (From April 1997) Page Interim/Business Interim SINGAPORE
Plaza de la Lealtad, 2 45 Avenue du Roule 17-05 Clifford Centre
2(0) piso BP 143 24 Raffles Place
28014 Madrid 92204 Nueilly Sur Seine Cedex Singapore 048621
Tel: 00 331 41 92 4242 Tel: 00 65 533 2777
Fax: 00 331 41 92 4243 Fax:-00 65 533 7227
</TABLE>
MICHAEL PAGE GROUP PLC
32
<PAGE>
<TABLE>
REPORT & ACCOUNTS 1996
OFFICES
ACCOUNTANCY ADDITIONS
<C> <C> <C>
CRAWLEY KINGSTON LONDON - VICTORIA
1 Queens Square 39-41 Market Place 191 Victoria Street
Crawley RH10 1DY Kingston-Upon-Thames KT1 1JQ London SW1E 5NE
Tel: 01293 533224 Tel: 0181 549 7855 Tel: 0171 233 5973
Fax: 01293 524136 Fax: 0181 549 7988 Fax: 0171 233 7938
CROYDON LONDON - CITY MAIDSTONE
37 George Street 146 Bishopsgate 29 High Street
Croydon CR0 1LP London EC2M 4JX Maidstone ME14 1JF
Tel: 0181 688 8272 Tel: 0171 247 6414 Tel: 01622 663942
Fax: 0181 688 7170 Fax: 0171 377 9884 Fax: 01622 663944
EALING LONDON BRIDGE READING
20A The Mall 3 Southwark Street 1-3 Queen Victoria Street
Ealing W5 2PT London SE1 1RQ Reading RG1 1SY
Tel: 0181 840 9334 Tel: 0171 234 0393 Tel: 01189 571122
Fax: 0181 840 9324 Fax: 0171 403 3937 Fax: 01189 591261
GUILDFORD LONDON - STRAND SLOUGH
232 High Street, 390-391 The Strand 144 High Street
Guildford GU1 3JF London WC2R 0LT Slough SL1 1JQ
Tel: 01483 450278 Tel: 0171 379 5333 Tel: 01753 550808
Fax: 01483 450283 Fax: 0171 836 0655 Fax: 01753 553140
HARROW LONDON - WEST END WATFORD
18 Peterborough Road, 67-71 Oxford Street 162-164 High Street
Harrow HA1 2BQ London W1R 1RB Watford WD1 2EG
Tel: 0181 864 7002 Tel: 0171 287 2699 Tel: 01923 819192
Fax: 0181 864 2765 Fax: 0171 287 0403 Fax: 01923 817241
SALES RECRUITMENT SPECIALISTS
LONDON ETON
Savannah House Windsor Bridge House
11 Charles II Street 1 Brocas Street
London SW1Y 4QZ Eton SL4 6BW
Tel: 0171 831 5980 Tel: 01753 867727
Fax: 0171 839 5231 Fax: 01753 842303
BIRMINGHAM (from June 97) LEEDS
Bennetts Court 6th Floor, Aquis House,
6 Bennetts Hill 12 Greek Street
Birmingham B2 5ST Leeds LS1 5RU
Tel: 0121 632 5772 Tel: 0113 242 7444
Fax: 0113 244 3992
</TABLE>
MICHAEL PAGE GROUP PLC
33
EXHIBIT 99.5
The audited financial statements of Michael Page Group PLC for the year ended
31 December 1996 are set out on pages 14 to 29 of Exhibit 99.4. An additional
note showing the estimated differences between UK Generally Accepted Accounting
Principles (GAAP) and US GAAP is set out below. This note was not included in
the UK audited accounts of Michael Page Group PLC. However, the auditors have
indicated that, had this note been included in these accounts, they would have
been prepared to extend their audit report of 7 March 1997 to cover the
information included in this additional note.
SUMMARY OF DIFFERENCES BETWEEN UK GAAP AND US GAAP
The following is a summary of the estimated material adjustments to profit after
taxation and ordinary shareholders funds which would be required if US GAAP had
been applied:
Year Ended 31 December
NET INCOME BEFORE DIVIDENDS ........................ 1996 1995
[L]'000 [L]'000
Net income before dividends under UK GAAP .......... 19,467 11,174
US GAAP Adjustments ................................ -- --
---------- ----------
Net income before dividends under US GAAP .......... 19,467 11,174
---------- ----------
31 December
SHARE OWNERS' FUNDS ................................ 1996 1995
[L]'000 [L]'000
Share owners' funds under UK GAAP .................. 37,325 24,851
US GAAP Adjustments:
Recognition of Goodwill ............................ 1,382 1,457
Shares owned by employee share option plan ......... (364) (295)
Proposed final ordinary dividend, not yet declared . 4,348 2,400
---------- ----------
Shares owners' funds under US GAAP ................. 42,691 28,413
---------- ----------
MICHAEL PAGE GROUP PLC
1
<PAGE>
NOTES TO THE RECONCILIATION TO US ACCOUNTING PRINCIPLES
The consolidated financial statements of Michael Page Group PLC (the company)
are prepared in accordance with GAAP applicable in the UK which differ in
certain significant respects from those applicable in the U.S. These differences
relate principally to the following items.
GOODWILL AND US PURCHASE ACCOUNTING
Under US and UK GAAP, purchase consideration in respect of subsidiaries acquired
is allocated on the basis of fair values to the various net assets, including
intangible fixed assets, of the subsidiaries at the dates of acquisition and any
remaining balance is treated as goodwill.
In compliance with UK GAAP, the group has accounted for payments which are
contingent on future events when the amounts payable can be assessed with
reasonable certainty. Under US GAAP payments which are contingent on future
events are only accounted for when the contingency is resolved and the
additional consideration distributable. The adjustment for the year ended 31
December 1995 represents the reversal of goodwill recognized under UK GAAP in
respect of payments to acquire a minority interest where the payments are
contingent on future events.
In conformity with the preferred treatment under UK GAAP, the company has fully
written off goodwill against share owners equity. Under US GAAP goodwill in
respect of business combinations accounted for as purchases would be capitalized
and charged against income over its estimated useful life. The adjustment for
the year ended 31 December 1996 is to capitalize goodwill, under US GAAP, in
respect of payments to acquire minority interests. The effective date of
purchase of these minority interests under US GAAP is deemed to be 31 December
1996.
DIVIDENDS
Under UK GAAP, final ordinary dividends are provided in the financial statements
on the basis of recommendation by the board of directors. This requires
subsequent approval by the shareholders to become a legal obligation of the
company. Under US GAAP, dividends are only provided when the legal obligation to
pay arises.
SHARES OWNED BY EMPLOYEE SHARE OPTION PLAN (ESOP)
Under UK GAAP, shares purchased by the ESOP are recorded as fixed asset
investments at cost less amounts written off. Under US GAAP, these shares are
recorded at cost and deducted from share owners' equity.
CASH FLOWS
Under UK GAAP the company complies with Financial Reporting Standard No. 1
revised 'cash flow statements' (FRS1 revised), the objectives and principles of
which are similar to those set out in Statement of Financial Accounting Standard
95 'Statement of Cash Flows' (SFAS 95).
MICHAEL PAGE GROUP PLC
2
<PAGE>
The principal difference between the two is in respect of classification. Under
FRS1 revised, the company presents its cashflows for (a) operating activities;
(b) return on investments and servicing of finance; (c) taxation; (d) investing
activities; (e) equity dividends paid and (f) financing activities. SFAS 95
requires only three categories of cash flow activity (a) operating; (b)
investing and (c) financing.
Cash flows arising from taxation, equity dividends paid and returns on
investment and servicing of finance under FRS1 revised would be included as a
financing activity under SFAS 95.
MICHAEL PAGE GROUP PLC
3
EXHIBIT 99.6
INTERIM SERVICES INC.
PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
The following pro forma condensed consolidated financial information of
Interim, Michael Page and the Other Acquisitions ("Acquisitions") is based on
the historical financial statements of Interim, Michael Page, and the Other
Acquisitions and has been prepared to illustrate the effects of the Acquisitions
and adjustments to the Michael Page financial information to conform the
presentation to US GAAP.
The pro forma condensed consolidated statements of operations for the year
ended December 27, 1996 give effect to each of these transactions as if such
transactions had been completed as of December 30, 1995. The pro forma condensed
consolidated balance sheet as of December 27, 1996 gives effect to each of these
transactions as if such transactions had been completed on December 27, 1996.
The audited financial statements of Michael Page included herein, from
which the historical financials have been derived, were prepared in accordance
with UK GAAP. UK GAAP differs from US GAAP in certain respects. Had the
financial information of Michael Page for the year ended December 31, 1996 been
recorded in accordance with US GAAP, shareholder's equity would have been
[L]42,691,000 instead of the [L]37,325,000 as presented herein.
The Acquisitions will be accounted for using the purchase method of
accounting. The total purchase price of the Acquisitions will be allocated to
the tangible and intangible assets acquired and liabilities assumed based upon
their respective fair values. The allocation of the aggregated purchase price
reflected in the pro forma condensed consolidated financial information is
preliminary. The final allocation of the purchase price will be contingent upon
the receipt of the final appraisals of certain acquired assets and final
determination of assumed liabilities.
The pro forma condensed consolidated financial information does not purport
to represent the actual financial position or results of operations of Interim
had the transactions assumed therein in fact occurred on the dates specified,
nor are they necessarily indicative of the results of operations that may be
achieved in the future. The pro forma condensed consolidated financial
information is based on certain assumptions and adjustments described in the
notes hereto and should be read in conjunction therewith.
<PAGE>
<TABLE>
INTERIM SERVICES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(amounts in thousands, except per share amounts)
<CAPTION>
FOR THE TWELVE MONTHS ENDED DECEMBER 27,1996
-----------------------------------------------------------------------------------------
HISTORICAL ACQUISTIONS 1)
HISTORICAL ------------------------------------ PRO FORMA
INTERIM MICHAEL PAGE OTHER ACQUISITIONS ADJUSTMENTS PRO FORMA
--------------- --------------- ------------------ --------------- ---------------
<S> <C> <C> <C> <C> <C>
Revenues from services $ 1,147,151 $ 221,745 $ 59,230 $ (1,002) 2) $ 1,427,124
Cost of services 795,789 153,162 21,984 (1,002) 2) 969,933
--------------- --------------- ------------------ --------------- ---------------
Gross Profit 351,362 68,583 37,246 -- 457,191
--------------- --------------- ------------------ --------------- ---------------
Selling, general and
administrative expenses 243,652 23,565 33,840 (553) 3) 300,504
Licensee commissions 39,500 -- -- (870) 3) 38,630
Amortization of intangibles 8,802 -- 135 13,788 4) 22,725
Interest expense, net 5,696 (2,469) 220 40,958 5) 44,405
Merger expense 8,600 -- -- -- 8,600
--------------- --------------- ------------------ --------------- ---------------
306,250 21,096 34,195 53,323 414,864
--------------- --------------- ------------------ --------------- ---------------
Earnings before taxes 45,112 47,487 3,051 (53,323) 42,327
Income taxes 22,097 16,630 -- (13,667) 6) 25,060
--------------- --------------- ------------------ --------------- ---------------
Net earnings $ 23,015 $ 30,857 $ 3,051 $ (39,656) 17,267
=============== =============== ================== =============== ===============
Net earnings per common and
common equivalant shares $ 1.38 $ 1.03
=============== ===============
Weighted average shares
outstanding 16,709 16,709
See notes to proforma condensed consolidated financial information.
</TABLE>
<PAGE>
<TABLE>
INTERIM SERVICES INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 27, 1996
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
HISTORICAL ACQUISTIONS 1)
----------------------------
HISTORICAL MICHAEL OTHER PRO FORMA
INTERIM PAGE ACQUISITIONS ADJUSTMENTS PRO FORMA
----------- ------------ ------------ --------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 18,938 $ 69,308 $ 91 $ -- $ 88,337
Marketable securities 7,499 7,499
Receivables 186,732 40,063 8,956 (3,589) 7) 232,162
Insurance deposits 32,794 -- 4 -- 32,798
Other current assets 18,301 -- 341 3,200 8) 21,842
----------- ------------ ------------ ------------ --------------
Total Current Assets 264,264 109,371 9,392 (389) 382,638
INTANGIBLE ASSETS, NET 174,747 2,338 2,425 544,322 9) 723,832
PROPERTY, PLANT, AND EQUIPMENT, NET 49,795 12,590 1,371 -- 63,756
OTHER ASSETS 23,684 -- 393 (234) 7) 23,843
----------- ------------ ------------ ------------ --------------
$ 512,490 $ 124,299 $ 13,581 $ 543,699 $ 1,194,069
=========== ============ ============ ============ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable to banks and other $ -- $ 7 $ 2,283 $ (297) 7) $ 1,993
Accounts payable and other accrued
expenses 27,092 26,466 1,990 (1,710) 7) 53,838
Accrued salaries, wages, and payroll
taxes 40,948 10,484 1,924 (1,054) 7) 52,302
Accrued insurance 26,782 -- 69 (69) 7) 26,782
Accrued income taxes 159 15,064 -- -- 15,223
----------- ------------ ------------ ------------ --------------
Total Current Liabilities 94,981 52,021 6,266 (3,130) 150,138
LONG-TERM DEBT -- 46 1,002 625,374 10) 626,422
DEFERRED TAX LIABILITY 2,798 2,798
STOCKHOLDERS' EQUITY:
Common stock 195 2,101 1 (2,102) 11) 195
Additional paid-in capital 251,236 1,959 -- (1,959) 11) 251,236
Treasury stock/Michael Page ESOP (460) (616) -- 616 11) (460)
Retained earnings 163,740 68,788 6,312 (75,100) 11) 163,740
----------- ------------ ------------ ------------ --------------
Total Stockholders' Equity 414,711 72,232 6,313 (78,545) 414,711
----------- ------------ ------------ ------------ --------------
$ 512,490 $ 124,299 $ 13,581 $ 543,699 $ 1,194,069
=========== ============ ============ ============ ==============
See notes to proforma condensed consolidated financial information.
</TABLE>
<PAGE>
INTERIM SERVICES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
FOR THE TWELVE MONTHS ENDED DECEMBER 27, 1996
IN $000S
1) Reflects the historical financial statements of the companies. Michael
Page's balance sheet has been converted to U.S. dollars using the December
27, 1996 exchange rate, and the statement of earnings was converted using
average exchange rates for the period presented. Michael Page's financial
statements have also been adjusted for GAAP differences as described in
Exhibit 99.5 - Additional note to Michael Page financial statements.
2) Reclassification of royalties as a result of repurchase of an Interim
franchise.
3) Represents the net adjustment to reflect: 1) a reclassification of licencee
commissions as a result of repurchase of Interim licensees operations -
$870; 2) the elimination of shareholder bonus for payment of taxes of an
S-corporation - $(800); and 3) the elimination of legal fees related to a
liability that was not assumed - $(623).
4) Represents: 1) amortization of additional goodwill generated by the
Acquisitions on a straight line basis over an average of 40 years; and 2)
elimination of the amortization of goodwill not assumed - $135.
5) Represents pro forma effect of interest charges on additional borrowings
used to fund the Acquisitions on Interim's line of credit and the related
amortization of the cost of the facility (see note 8). Interest on these
facilities is computed at LIBOR plus 95 basis points.
6) To record aggregate tax effect on US adjustments at a tax rate of 40% and on
UK adjustments at a tax rate of 33%.
7) Represents the elimination of assets and liabilities not acquired.
8) Represents costs incurred in connection with obtaining the new credit
facility to finance the Acquisitions. These costs are being amortized to
interest expense over a 6 year period and are included in pro forma
statement of income adjustments.
9) Represents the premium paid after the application of purchase accounting to
identified tangible and intangible assets of $544,457 and the elimination of
goodwill not acquired of $234.
10) Represents the incremental borrowings used to fund the Acquisitions.
11) Represents the elimination the of Acquisitions' equity.
