Whitehead Mann Group PLC
13 June 2000
NOT FOR RELEASE IN OR INTO THE UNITED STATES, CANADA, JAPAN, AUSTRALIA OR THE
REPUBLIC OF IRELAND
ANNOUNCEMENT OF AUDITED RESULTS
FOR THE YEAR ENDED 31 MARCH 2000
A year of transformation
Whitehead Mann has made a significant advance in the year ended 31 March 2000.
Demand for our core business has continued to build, our position in the
boardrooms of major clients has flourished, the development of our consultancy
product, Management Asset Valuation, has developed extensively and the
appointment of the new Chief Executive and his team has been swiftly and
smoothly managed. All this has combined to make this a year of transformation
for the Group. And, since the end of the reporting year, negotiations have
been progressing successfully for the two mergers in the UK and the US.
The Group recorded an 8 per cent. increase in turnover to £27.7 million. The
second half of the year was particularly strong, with underlying growth of 15
per cent. Profit before tax and exceptional property costs rose by 19 per
cent. to £5.0 million.
The board is recommending a final dividend of 6.1p, making a total of 10.5p
for the year, an increase of 17 per cent. The final dividend will be paid on
30 August 2000 to shareholders on the register on 28 July 2000.
Whitehead Mann's flagship Board Practice, led by Anna Mann, continues to
expand and there have been a number of notable, high profile, appointments to
the boards of well-known companies. An increasing proportion of the Board
Practice business is international, and this is likely to be enlarged by the
Group's merger strategy.
The growth in executive search assignments in the past year has been
impressive, and the value of this sector of the business has doubled over the
past three years.
The selection business is moving forward and is being augmented by the
establishment of a new e-recruiting approach.
EXPANSION OF MAV
The Group's consultancy product, Management Asset Valuation ('MAV'), continues
to be a success. A major project started in the second half of the year which
involved consultancy activities across four continents. Currently the
consulting team is carrying out assignments for five major clients, all
involved with mergers.
MERGER WITH GKR
The proposed merger with GKR will reinforce our position in key market sectors
in the UK, and will provide a strong base for our international expansion. We
will have the resources to invest in people and technology in both the UK and
We intend to establish an office in each of the five core markets: the UK, the
US, France, Germany and South East Asia. Two major steps have been taken to
implement this strategy during the year. An office has been established in
Paris and our team in New York has been strengthened.
The proposed addition of GKR's US partner, Pendleton James Associates, Inc.,
will significantly enhance our presence in the world's largest executive
Gerard Clery-Melin, who joined us as Managing Director International in June
1999, became Chief Executive in January 2000. He brings with him a
distinguished record in the search and selection business and will be taking
the lead in the development of the Group's international strategy and in this
role will be supported by Clive Mann. Clive Mann, who as Chief Executive
before Gerard, steered the Group into its status as a public company, has
become Deputy Chairman.
Matt Brassington, formerly Group Financial Controller, was appointed Finance
Director in January 2000.
When the merger with GKR is completed, three of their directors will join our
board: Philip Marsden, currently a Managing Partner of GKR, will become Deputy
Chief Executive and Henry King and Dame Stella Rimington will become Non-
Executive Directors of the Group.
Whitehead Mann's continued success would not be possible without the loyalty,
enthusiasm, and drive of our staff. The strength of the brand reflects the
quality of both the professional team and support staff. I would like to
thank them for their hard work and valuable contribution to the business.
It is my intention to step down as Chairman during the coming year. In more
than fifteen years as Chairman, I have seen Whitehead Mann grow from a small
private entity into a listed public company which is now on the threshold of
significant international expansion. I have the utmost confidence that the
Group has the resources and people to match the worldwide opportunities ahead.
The past year has seen the transition of Whitehead Mann from a major national
firm to a nascent international enterprise. Change has always been a
condition of life in the search market, and more so than ever at present. The
opportunities for growth and consolidation have been opening up for those
international players with the ability and quality to keep up with the pace.
We intend to be one of them.
The current year begins with trading strong. Our businesses continue to
perform well, with turnover well ahead of the same period last year.
CHIEF EXECUTIVE'S REVIEW
A CHANGING WORLD
Today's business world is changing rapidly and there is an increasing need for
human ingenuity, skills and talent. Whitehead Mann provides services to meet
this need. It has been one of the UK's leading senior executive search firms
for many years and seeks to add value to a client's business by assisting in
the recruitment, evaluation and retention of key executives.
Up to three years ago the world market was dominated by five large integrated
firms and three networks of independent local firms. Whitehead Mann was one
of the largest members of the Amrop network. We resigned from Amrop in
September 1999 in order to pursue our own international strategy.
During the past two years, the search market has undergone a period of
consolidation. Two of the largest five integrated firms were floated as
public companies in the US and have become increasingly acquisitive. A new
major firm has been built up through the consolidation and acquisition of a
number of smaller firms. All three of these firms appear to be focusing on
size. Two of the three networks have declined significantly, with member
firms in many countries having been acquired by these three global
The other integrated international firms are more focused on senior level
executive search and remain Whitehead Mann's main rivals in the UK and
Whitehead Mann intends to become one of the top four value-added integrated
search firms by pursuing a focused international strategy.
Because of the increasing competition and resources behind the larger global
players both Whitehead Mann and GKR might have been vulnerable if they
remained independent. As a combined force we will significantly increase our
presence in the UK market and have the resources to provide and sustain a
strong competitive advantage.
Following completion of the GKR acquisition, the enlarged group will adopt the
trading name Whitehead Mann GKR.
Our expertise lies in our ability both to attract senior executives and advise
our clients on the nature and implications of the impact of effective people
on corporate performance, not just in the UK, but internationally.
Our business has been reorganised into a number of business units each focused
on a specific market sector. Currently these are:
- board practice;
- global banking;
- consumer financial services and asset management;
- brands and leisure;
- retail and media;
- business services;
- industry; and
- pharmaceutical and healthcare.
The business units will be the driving force behind the Group's international
expansion. Each will be fully integrated with partners, consultants and
research support in London, New York, Paris and, at a later stage, Germany and
the Far East.
THE BOARD PRACTICE
The Whitehead Mann Board Practice acts for a wide variety of companies as a
key adviser on board issues. This includes board structure, composition and
remuneration, as well as the appointment of chairmen, chief executives, chief
financial officers and independent directors.
The Board Practice offers a unique blend of boardroom experience, knowledge
and skill. The credibility of our partnership with each client derives from
our recognition of the need for integrity, discretion and confidentiality.
We focus on the development of long term partnerships with core clients
supported by business unit teams. The search practice has a strong and stable
team of professional consultants supported by an established research base.
Executive search continues to be our core business. The volume and value of
new search assignments, excluding the Board Practice, has more than doubled
over the past three years.
During the last year, the average salary across all search assignments,
excluding those for non-executive directors, exceeded £140,000.
SELECTION AND E-RECRUITING
Whitehead Mann operates at the top of the traditional advertised selection
market. Demand has been subdued for the past eighteen months, and we
transferred our resources to search and consulting. However, the volume of
new selection business has now started to improve and our business units are
selectively targeting expansion in this sector.
A significant development during the past year has been the development of e-
recruiting. Replies to advertisements are now principally accepted through e-
mail, and all advertisements are listed on the Whitehead Mann website
The traditional advertised selection market is changing with the development
of internet techniques. This will enable us to offer a faster service for our
clients as well as improving our internal efficiency.
The past two years have seen strong growth for consulting services since the
introduction of Management Asset Valuation ('MAV'). Consulting is now a major
revenue stream for the Group and a dedicated consulting team has been
established and is being expanded.
MAV benchmarks management against competition and the market using the
assessment skills of our experienced search professionals allied to
psychometric tests. The integration of the consulting and search teams is a
prerequisite for the long term growth of this business.
The board believes that there are significant long term growth opportunities
for consulting services, particularly through its expansion into Europe and
the US. The Group will continue to build up its consulting team to match the
needs of future demand.
As well as MAV, additional products are being evaluated and developed to
broaden the scope of our services. These will be introduced over the next few
During the year ended 31 March 2000 Whitehead Mann established a specialised
unit focused on e-business. This requires a different method of working
including faster execution time, virtual teams able to operate across
different disciplines and a more flexible fee structure, including equity
participation, to match the needs of start up operations.
This is a rapidly growing market and Whitehead Mann intends to establish
itself in a leading position. Candidates for e-business clients are attracted
from all sectors and functions.
Our international strategy is to focus on five core markets: the UK; the US;
France; Germany; and South East Asia. The first steps have been taken to
establish our presence in France and the US.
This expansion is being led by international business units centred around
industry sectors with an initial focus on board, financial services,
technology and consulting.
Whitehead Mann has opened an office in Paris under the leadership of a partner
seconded from the UK. Additional teams of partners and consultants have
already been attracted to the new operation and the Paris office will be
expanded further in the current financial year.
Our objective is to grow to be one of the top five search businesses in the
French market within three years. The Paris platform will be a hub for
development for search businesses throughout other areas of Europe.
The flagships of the French business are intended to be the Board Practice and
a MAV capability, positioning Whitehead Mann to provide services at the
highest level to French clients.
Our initial presence in the US has been strengthened and now totals five
members of our UK team on secondment. Local support staff are actively being
recruited. This initial presence will form the base for expansion into the
world's largest executive search market.
The proposed addition of Pendleton James Associates, Inc. will significantly
enhance our US presence. It is our intention to establish ourselves as a
serious player in the highly competitive US market within the next few years.
Our intention is to focus on senior level searches and on forming strong
relationships with a selected number of major clients.
GKR was founded in 1970 as Goddard Kay Rogers. It is one of the UK's leading
senior executive search and selection firms and currently employs 88 full-time
staff, with headquarters in London and offices in Leeds and Solihull. In the
year ended 31 August 1999, GKR reported revenues of £15.3 million.
Whitehead Mann and GKR have similar ambitions, style and culture and both face
the challenge of diversification into international markets. The integrated
professional team of the enlarged group will strengthen our position in key
market sectors in the UK and provide the foundation for the establishment of
strong business units across key international markets.
GROWTH IN PROFESSIONAL STAFF
As at 31 March 2000, Whitehead Mann had a professional team of 42 partners and
consultants supported by 27 research staff. Total staff in the UK, France and
New York numbered 118.
For its part GKR currently has 27 professional staff, plus 22 in research and
39 support staff.
The proposed addition of Pendleton James Associates, Inc. in the US and our
own expansion in France is likely to increase the total number of employees to
over 250 by March 2001. This will include a team of about 150 consultant and
The addition of GKR will consolidate our position as one of the leading senior
level executive search firms in the UK. Our international strategy is being
implemented with the proposed acquisition of Pendleton James and the
development of our office in Paris, helping to establish Whitehead Mann as a
serious player in these markets.
Our management team has been strengthened and new international business units
established. We will continue to invest in these resources to meet the
requirements of our clients and provide a quality service in executive search,
selection and consulting. This will be reinforced by the growing demand for
our services to e-business and MAV.
Our future is exciting. These growth plans are focused on leveraging our
existing strengths to meet the changing demands of our clients and enhance
Consolidated profit and loss account for the year ended 31 March 2000
Turnover 27,712 25,600
Staff costs (14,897) (14,030)
Depreciation (526) (531)
Other operating charges (excluding exceptional (7,579) (7,177)
Exceptional property costs -- (400)
Before exceptional costs 4,710 3,862
Exceptional property costs -- (400)
Interest receivable 298 349
Profit on ordinary activities before taxation 5,008 3,811
Tax on profit on ordinary activities (1,650) (1,301)
Profit for the financial year 3,358 2,510
Dividends (1,584) (1,355)
Retained profit for the year 1,774 1,155
Earnings per share 22.27p 16.53p
Diluted earnings per share 22.05p 16.42p
Earnings per share before exceptional property costs 22.27p 18.34p
All of the group's activities are regarded as continuing and there were no
acquisitions in the year.
Statement of recognised gains and losses
There were no recognised gains and losses other than those included in the
profit and loss account.
Consolidated balance sheet as at 31 March 2000
Tangible fixed assets 1,869 1,648
Investments 717 745
Debtors 7,107 5,292
Cash at bank and in hand 4,898 4,694
Creditors: amounts falling due within one year (7,632) (7,103)
Net current assets 4,373 2,883
Total assets less current liabilities 6,959 5,276
Creditors: amounts falling due after more than one (208) (299)
year --------- ---------
Net assets 6,751 4,977
Capital and reserves
Called up share capital 776 776
Profit and loss account 5,975 4,201
Equity shareholders' funds 6,751 4,977
Consolidated cashflow statement for the year ended 31 March 2000
Net cash inflow from operating activities 3,733 3,445
Returns on investments and servicing of finance
Interest received 298 349
UK taxation paid (1,579) (1,200)
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,012) (332)
Purchase of own shares -- (493)
Sale of tangible fixed assets 242 131
Net cash outflow from capital expenditure and (770) (694)
Equity dividends paid (1,478) (1,231)
Cash inflow before management of liquid resources and 204 669
Management of liquid resources -- 1,003
Money market withdrawals
Increase in cash in the period 204 1,672
The interim dividend per share of 4.4p and the final dividend per share of
6.1p are based on a dividend of £664,000 and a proposed final dividend of
£920,000 respectively and on the 15,078,957 5p ordinary shares in issue and
ranking for dividend at the end of the year (excluding shares held by the
Whitehead Mann Group Plc Employee Benefit Trust, which has waived its right to
2. Earnings per share
Earnings per share 22.27p 16.53p
Diluted earnings per share 22.05p 16.42p
Earnings per share before exceptional property costs -- 18.34p
The calculation of earnings per share of 22.27p (1999: 16.53p) is based on a
profit for the year of £3,358,000 (1999: £2,510,000) and on 15,078,957 shares
(15,189,260), being the weighted average number of shares in issue during the
year (excluding the shares held by the Whitehead Mann Group Plc Employee
Benefit Trust). Diluted earnings per share is based on a profit for the year
of £3,358,000 (1999: £2,510,000) and on 15,228,087 shares (1999: 15,294,389)
reflecting the effect of outstanding share options and allocations made by the
Employee Benefit Trust. Earnings per share before exceptional property costs
in 1998/9 was based on a profit for the year of £2,786,000, after adding back
after tax property costs of £276,000, and on 15,189,260 shares, being the
weighted average number of shares in issue during that year. The directors
believe this more accurately reflects the underlying performance of the group
3. Exceptional property costs
As at 31 March 2000 the group continues to hold the lease on a property that
it does not occupy, which expires in 2003. The property was let during 1998/9
and an amount equal to the difference between the rental income and the rental
outgoings until the group's lease expires, of £400,000, charged against
4. Reconciliation of operating profit to net cash inflow from operating
Operating profit 4,710 3,462
Depreciation 526 531
Increase in debtors (2,054) (827)
Increase in creditors 500 257
Profit on disposal of fixed assets 23 (1)
Movement on investments 28 23
Net cash inflow from operating activities 3,733 3,445
5. Analysis and reconciliation of net funds
Cash at Money
bank and market Total net
in hand deposits Sub-total Bank loan funds
£'000 £'000 £'000 £'000 £'000
At 1 April 1999 3,194 1,500 4,694 (200) 4,494
Cash inflow 204 -- 204 -- 204
-------- -------- --------- --------- --------
At 31 March 2000 3,398 1,500 4,898 (200) 4,698
======== ======== ========= ========= ========
The financial information included in this document does not constitute
statutory accounts within the meaning of section 240 of the Act. The accounts
for the year ended 31 March 2000 were approved by the board and received an
unqualified audit report on 12 June 2000. The accounting policies adopted are
the same as those used in preparing the accounts for the year ended 31 March
The statutory accounts for each of the two years ended 31 March 1999 and 31
March 2000 received audit reports which were unqualified and did not contain
statements under section 237(2) or (3) of the Companies Act 1985. The
statutory accounts for the year ended 31 March 1999 have been delivered to the
Registrar of Companies but the statutory accounts for the year ended 31 March
2000 have not yet been filed.
Not for release in or into the United States, Canada, Japan, Australia or the
Republic of Ireland
WHITEHEAD MANN GROUP PLC
The following definitions apply throughout this document and the Form of
Proxy, unless the context otherwise requires:
'Act' the Companies Act 1985, as amended
'Admission' admission of the Consideration Shares to the Official
List and admission to trading on the main market of the
London Stock Exchange
'Acquisitions' means the Pendleton James Acquisition and the GKR
'Pendleton James' Pendleton James Associates, Inc.
'Pendleton James the proposed acquisition of Pendleton James as
Acquisition' contemplated in the Pendleton James Heads which is
subject, inter alia, to the completion of due diligence
and the finalisation of legal documentation
'Pendleton James the non-binding heads of term dated 12 June 2000 for the
Heads' proposed acquisition of Pendleton James by Whitehead
'Beneficiaries' the beneficiaries of the GKR Trust
'Close Brothers' Close Brothers Corporate Finance Limited, sponsor and
financial adviser to the Company
'Consideration the 4,360,626 new Ordinary Shares to be issued as part
Shares' of the consideration for the GKR Acquisition
'Completion' completion of the GKR Acquisition
'CREST' the computerised settlement system operated by CRESTCo
Limited to facilitate the transfer of title to shares in
'Directors' or the current directors of the Company being Sir Peter
'Board' Parker, Clive W Mann, Gerard Clery-Melin, Matthew
Brassington, Hugh Robert Collum, Alan K P Smith, Sir
Colin G Southgate and David E Tagg
'Enlarged Group' the Whitehead Mann Group, as enlarged by the acquisition
'Existing Ordinary the 15,525,000 Ordinary Shares currently in issue
'Extraordinary the extraordinary general meeting of the Company, or any
General Meeting' or adjournment thereof, to be held on 29 June 2000
'GKR' GKR Group Limited
'GKR Acquisition' the proposed acquisition of GKR by Whitehead Mann
pursuant to the Sale and Purchase Agreement
'GKR Group' GKR and its subsidiary undertakings
'GKR Trust' the Goddard Kay Rogers Employees' Benefit Trust, being
the holder of the entire issued share capital of GKR
'Key Employees' certain employees of GKR whom the Board considers to be
important to the business of GKR and each of whom the
advisory committee to the GKR Trust has recommended
receive an aggregate allocation of £175,000 or more of
the consideration for the GKR Acquisition and each of
whom has entered into a service agreement with the
'Listing the listing particulars setting out details of the
Particulars' or Acquisitions
'Listing Rules' the Listing Rules of the UK Listing Authority
'London Stock London Stock Exchange Limited
'Whitehead Mann' or Whitehead Mann Group Plc
'Whitehead Mann the Company and its subsidiary undertakings
Group' or 'Group'
'Official List' the Official List of the London Stock Exchange
'Ordinary Shares' ordinary shares of 5p each in the capital of the Company
'Proposed Austin Philip Marsden, Dame Stella Rimington and Henry
Directors' Edward St Leger King, currently directors of GKR
'Recipient those Beneficiaries to whom the advisory committee to
Beneficiaries' the GKR Trust has irrevocably recommended the
consideration payable under the terms of the Sale and
Purchase Agreement be allocated
'Regulations' the Uncertificated Securities Regulations 1995 (SI
'Sale and Purchase the conditional agreement dated 12 June 2000 and made
Agreement' between, inter alia, the trustee of the GKR Trust (1)
and the Company (2) relating to the GKR Acquisition
'Shareholder' the holders of Ordinary Shares
'UK' or 'United the United Kingdom of Great Britain and Northern Ireland
'UK Listing the Financial Services Authority acting as the UK
Authority' Listing Authority
'uncertificated' or an Ordinary Share recorded on the Company's share
'in uncertificated register as being held in uncertificated form in CREST
form' and title to which, by virtue of the Regulations, may be
transferred by means of CREST
'US' or 'United the United States of America
Exchange rate conversion
Unless otherwise stated an exchange rate of US$1.5045:£1 (being the mid-market
spot rate quoted in the Financial Times on 12 June 2000, being the latest
practicable date prior to the date of this announcement) has been used