Acquisition by TMP Worldwide & Results - Part 2
HW Group PLC
25 November 1999
Not for release, distribution or publication in or into Canada, Australia or
Japan.
24 November 1999
PART 2
Recommended acquisition of HW Group PLC by TMP Worldwide Inc.
and
Announcement of HW's unaudited interim results for the six months ended
30 September 1999
Chairman's and Chief Executive's Statement
Results and dividend
For the six months ended 30 September 1999, gross fee income was 1.4 per cent.
ahead of the comparable period at £28.0 million, but net fee income fell by
4.8 per cent. to £13.8 million. Profit before taxation was £1.4 million and
diluted earnings per share 3.4p, decreases of 28.6 per cent. and 33.3 per
cent. respectively below the levels achieved in the first six months of the
previous financial year.
The HW Board has declared an unchanged interim dividend of 1.0p net per HW
share which will be paid on 9 February 2000 to HW Shareholders on the
register on 6 January 2000.
Review
As HW Shareholders will already know from the statement made at the time of
the Annual General Meeting on 3 September 1999, employers continued to adopt a
cautious approach to permanent recruitment during the period under review and
the results from this side of the business have been disappointing. However,
whilst we are a long way from the growth rates being experienced in early
1998, there are signs that the market has stabilised and the productivity of
our individual consultants is up to our expectations in the majority of our
offices. Our strategy now is to build on those areas, both in geography and
in activity, where we are seeing growth and we are recruiting additional
consultants to convert opportunities to income. The additional overhead
associated with this strategy may depress earnings in the short term, but we
believe that it will deliver results over a longer period.
The other side of our business, the provision of temporary and contract staff,
has had a much more encouraging six months. Net fee income in this area was
23.9 per cent. ahead of the comparable period with the contribution to total
net fee income rising from 31.2 per cent. to 40.5 per cent., and the
contribution to operating profit was ahead of budget.
Project Darwin, the re-engineering of our business to enable us to deliver
most effectively all of our services to all of our clients, was implemented at
the beginning of the period. Such a fundamental shift in our approach could
not be achieved without some disruption and this certainly had an impact on
our immediate profitability. However, we have no doubt that we made the right
decision for the longer term and that we have a much better business as a
result.
The other major initiative completed during the period was the full
implementation of our new operational database, giving our consultants a
powerful tool for accessing both clients and candidates. That this took place
on time and with minimal problems is a tribute to our Internal Services Group.
Prospects
Today we have announced the recommended acquisition of HW Group by TMP.
Details of this acquisition, including the HW Board's reasons for recommending
it, are set out in Part 1 of this announcement. A document setting out the
proposed scheme of arrangement will be posted to HW Shareholders shortly. Our
own strategy has increasingly been focused on the opportunities provided by
new technology, particularly through the Internet, for the profitable
expansion of our business and TMP is a leader in this field.
We retain an excellent brand in the finance and accountancy markets in the UK,
with a good position in both legal and human resources recruitment and a
growing presence in technology and international recruitment. We remain
confident of our ability to exploit these for the benefit of current and
future shareholders.
Richard Mead Graham Palfery-Smith
Chairman Chief Executive
24 November 1999
Consolidated profit and loss account
Unaudited Unaudited Audited
6 months 6 months Year
to to ended 31
30 30 March
September September 1999
1999 1998
Note £'000 £'000
£'000
Gross fee income 2 28,031 27,635 56,715
------ ------ ------
Net fee income 2 13,771 14,462 28,323
------ ------ ------
Operating profit 1,407 2,136 4,288
Net interest (41) (223) (263)
------ ------ ------
Profit on
ordinary 1,366 1,913 4,025
activities before
taxation
Taxation 3 (447) (650) (1,317)
------ ------ ------
Profit on
ordinary 919 1,263 2,708
activities after
taxation
Equity dividends 4 (243) (266) (716)
Non equity - (32) (32)
dividends
------ ------ ------
Retained profit 676 965 1,960
------ ------ ------
Earnings per 5
share
Basic 3.9p 5.8p 12.3p
Diluted 3.4p 5.1p 10.7p
Consolidated Balance Sheet at 30 September 1999
Unaudited Unaudited Audited
30 30 31
September September March
1999 1998 1999
£'000 £'000 £'000
Fixed assets
Tangible assets 3,982 2,381 3,284
Investments - own 32 88 85
shares
------ ------ ------
4,014 2,469 3,369
------ ------ ------
Current assets
Debtors 11,522 11,080 9,448
Cash 2,000 1,578 2,569
------ ------ ------
13,522 12,658 12,017
Creditors due within (9,587) (9,037) (8,437)
one year
------ ------ ------
Net current assets 3,935 3,621 3,580
------ ------ ------
Total assets less 7,949 6,090 6,949
current liabilities
Creditors due after (1,217) (1,043) (893)
more than one year
------ ------ ------
Net assets 6,732 5,047 6,056
------ ------ ------
Capital and reserves
Share capital
- equity 266 266 266
Share premium
- equity 2,009 10,791 2,009
Profit and loss 4,457 (6,010) 3,781
account
------ ------ ------
Shareholders' funds 6,732 5,047 6,056
------ ------ ------
Cash Flow Statement to 30 September 1999
Unaudited Unaudited Audited
6 months to 6 months to Year ended
30 30 31 March
September September 1999
1999 1998
£'000 £'000 £'000
Cash flow from
operating activities
Operating profit 1,407 2,136 4,288
Depreciation charges 668 446 882
Profit on disposal (25) - -
of tangible assets
Decrease in stock 500 - -
and work in progress
(Increase)/decrease (2,574) (895) 734
in debtors
Increase/(decrease) 1,373 (349) (1,504)
in creditors
------ ------ ------
1,349 1,338 4,400
------ ------ ------
Returns on
investments and
servicing of finance
Interest received 23 12 43
Interest element of (50) (54) (126)
finance lease
payment
Interest paid (14) (667) (180)
Non equity dividends - (91) (59)
paid
------ ------ ------
(41) (800) (322)
------ ------ ------
Taxation (341) (24) (1,002)
Capital expenditure
Purchase of fixed (1,003) (153) (1,295)
assets
Disposal of fixed 77 - 46
assets
------ ------ ------
(926) (153) (1249)
------ ------ ------
Acquisitions and
disposals
Investment in own - - (85)
shares
Equity dividends (477) - (298)
paid
------ ------ ------
(436) 361 1,444
Financing
Issue of equity - 10,514 124
shares
Expenses on issue of - (1,279) (1,279)
equity shares
Redemption of - (915) (915)
preference shares
Premium on issue of - - 10,404
shares
Decrease in debt
- repayment of loans (1,166) (8,262) (8,262)
- capital element of (133) (239) (262)
finance leases
Increase in debt
-short term 834 - -
borrowings 332 - -
-Long term
borrowings
------ ------ ------
(133) (181) (190)
------ ------ ------
(Decrease)/increase (569) 180 1,254
in cash
------ ------ ------
Reconciliation of net cash flow to movement in net
debt
Unaudited Unaudited Audited
6 months to 6 months to Year ended
30 30 31 March
September September 1999
1999 1998
£'000 £'000 £'000
(Decrease)/increase (569) 180 1,254
in cash in period
Cash outflow from
decrease in debt and 133 8,501 8,524
lease financing
New finance leases (498) (600) (808)
and other movements
------ ------ ------
Movement in net debt (934) 8,081 8,970
------ ------ ------
Opening net 1,114 (7,856) (7,856)
funds/(debt)
Closing net funds 180 225 1,114
------ ------ ------
Movement in net debt (934) 8,081 8,970
------ ------ ------
Notes to the financial statements
1. Basis of preparation
The interim accounts for the six months ended 30 September 1999, together with
the comparatives for the six months ended 30 September 1998 are unaudited and
do not constitute statutory accounts in accordance with section 240 of the
Companies Act 1985. They have been prepared under the accounting policies set
out in the HW's statutory accounts for the year to 31 March 1999. The
taxation charge is calculated by applying the forecast annual rate to the
profit for the period.
The accounts for the year ended 31 March 1999 are abridged, but the full
accounts incorporating an unqualified auditors' report have been delivered to
the Registrar of Companies.
Interim accounts will be included within the document to be sent to HW
Shareholders setting out the proposed Scheme of Arrangement.
2. Segmental information
Gross fee income and profits arose from the Group's principal trading
activity. The analysis of the Group's gross fee income, by geographical
market is as follows:
Unaudited Unaudited Audited
6 months 6 months Year
to to ended
30 30 31 March
September September 1999
1999 1998
By destination £'000 £'000 £'000
United Kingdom 27,091 27,126 54,606
Overseas 940 509 2,109
------ ------ ------
28,031 27,635 56,715
------ ------ ------
The analysis of gross fee income and net fee income by recruitment
discipline is as follows:
Gross Fee Income
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 March
30 30 1999
September September
1999 1998
£'000 £'000 £'000
Finance and 20,819 21,643 44,631
accounting
Legal 1,589 1,609 2,955
Commercial and 1,578 1,954 3,994
technical
Senior secretarial 1,626 1,426 2,301
Information 2,419 1,003 2,834
technology
------ ------ ------
28,031 27,635 56,715
------ ------ ------
Net fee income
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 March
30 30 1999
September September
1999 1998
£'000 £'000 £'000
Finance and 9,573 10,265 20,374
accounting
Legal 1,514 1,507 2,730
Commercial and 1,358 1,692 3,386
technical
Senior secretarial 547 535 678
Information 779 463 1,155
technology
------ ------ -----
13,771 14,462 28,323
------ ------ ------
The percentage of total net fee income generated by temporary and contract
placements during the period was 40.5% in the current period, 31.2% in the six
months to 30 September 1998 and 34.8% in the year ended 31 March 1999.
3 Taxation
Taxation for the six months ended 30 September 1999 has been provided at 32.7
per cent. (1998: 34 per cent.) of profits, the estimated effective rate for
the period.
4 Dividends
Unaudited Unaudited Audited
6 months 6 months Year
to to ended
30 30 31 March
September September 1999
1999 1998
£'000 £'000 £'000
Ordinary shares
- paid - 266 266
- accrued 266 - 532
------ ------ ------
266 266 798
Preference (non
equity)
- paid - 15 15
- accrued - - -
'A' ordinary (non-
equity)
- paid - 17 17
- accrued - - -
------ ------ ------
266 298 830
Equity dividend
paid/payable to
the Employee Share (23) - (82)
Ownership Trust
------ ------ ------
243 298 748
------ ------ ------
5 Earnings per share
Basic earnings per share is based on the profit after taxation and in respect
of non-equity shares of £919,000 (1998: £1,248,000) and the weighted average
number of shares in issue during the period of 23,865,392 (1998: 21,459,987),
which assumes that the five for one share sub-division, that took place on HW
Group's flotation in June 1998, occurred at the start of the comparative
period.
The diluted earnings per share is based on 26,745,065 (1998:24,671,004)
ordinary shares which allows for the exercise of all outstanding options at
the beginning of the period (or date of issue, if later).
6 Analysis of net debt
At Cash Other At
31 flow changes 30
March September
1999 1999
£'000 £'000 £'000 £'000
Net cash at bank 2,569 (569) (85) 1,915
and in hand
Debt due after - (332) 332 -
more than one
year
Debt due within - 332 (332) -
one year
Finance leases (1,455) 133 (413) (1,735)
------ ----- ----- ------
Net funds/(debt) 1,114 (436) (498) 180
------ ----- ----- ------
7 Movement in shareholders' funds
Unaudited Unaudited Audited
6 months 6 months Year
to 30 to 30 ended
September September 31 March
1999 1998 1999
£'000 £'000 £'000
Retained profit 676 965 1,960
for period
Issue of equity - 124 124
shares
Premium on issue - 10,390 10,404
of equity shares
Expenses on issue - (1,279) (1,279)
of equity shares
Redemption of - (915) (915)
preference shares
Opening 6,056 (4,238) (4,238)
shareholders'
funds
------ ------ ------
Closing 6,732 5,047 6,056
shareholders'
funds
------ ------ ------
Review report by the auditors to HW Group PLC
Introduction
We have been instructed by the company to review the financial information
comprising the consolidated profit and loss account, the consolidated balance
sheet, the cash flow statement and notes 1 to 7 set out on the preceding pages
and we have read the other information contained in the interim results and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
Directors' responsibilities
The interim results, including the financial information contained therein,
are the responsibility of, and have been approved by the directors. The
Listing Rules of the London Stock Exchange require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board. A review consists principally
of making enquiries of group management and applying analytical procedures to
the financial information and underlying financial data and based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities
and transactions. It is substantially less in scope than an audit performed
in accordance with Auditing Standards and therefore provides a lower level of
assurance than an audit. Accordingly we do not express an audit opinion on
the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 1999.
BDO STOY HAYWARD
Chartered Accountants
London
24 November 1999
Year 2000 compliance
As is well known, many computer and digital storage systems express dates
using only the last two digits of the year and will thus require modification
or replacement to accommodate the year 2000 and beyond in order to avoid
malfunctions and resulting widespread commercial disruption. This is a
complex and pervasive issue. The operation of HW Group's business depends not
only on its own computer systems, but also to some degree on those of its
suppliers and customers. This could expose HW Group to further risk in the
event that there is a failure by other parties to remedy their own Year 2000
issues.
HW Group made a significant investment in its information systems for the
purpose of improving its business performance and in so doing, has ensured
that all its systems will be Year 2000 compliant. The costs of new hardware
and software were and are being capitalised as incurred, with the main
investment made over the two years ending 31 March 1999. Other costs
associated with implementing plans to ensure systems are Year 2000 compliant
will be subsumed into the recurring activities of the departments involved.
The HW Board does not envisage having to spend further significant amounts in
connection with ensuring its systems are Year 2000 compliant.
Given the complexity of the problem, it is not possible for any organisation
to guarantee that no Year 2000 problems will remain, because at least some
level of failure may still occur. However, the HW Board believes that it will
achieve an acceptable state of readiness and has also provided resources to
deal promptly with significant subsequent failures or issues that might arise.
APPENDIX I
Financial effects of the Acquisition
The following tables show (for illustrative purposes only and on the basis
set out in the notes below) the financial effects for a holder of one HW Share
if the Scheme becomes effective. No account is taken of fractional
entitlements, or of any liability to taxation, in assessing the financial
effects of acceptance.
1. Capital value
Acquisition Price per one HW Share 130.0p
Market value of one HW Share 1 78.5p
Increase in capital value 51.5p
Percentage increase in capital value 65.6%
Notes :
1. The market value of one HW Share is based on the closing middle market
price of 78.5p per HW Share (as published in the Daily Official List) on 6
September 1999, the last business day before the commencement of the Offer
Period.
2. Dividend income
Dividend income from one TMP Share 1 0.0p
Dividend income from one HW Share 2 3.0p
Increase/(decrease) in dividend income (3.0p)
Percentage increase/(decrease) in dividend (100.0%)
income
Notes:
1.TMP has not to date paid any dividends on its shares and has no current
intention of doing so. TMP currently intends to retain any earnings to
finance current operations and further expansion and, therefore, does not
anticipate paying or declaring any dividends or making any other
distribution of income for the foreseeable future.
2. Based on the aggregate of the final dividend of 2.0p per HW Share for the
year ended 31 March 1999 and the interim dividend, declared today, of 1.0p per
HW Share for the six months ended 30 September 1999.
APPENDIX II
Conditions to the implementation of the Acquisition
The Acquisition and the Scheme are conditional upon the following taking place
by 28 February 2000 (or such later date as TMP and HW may, with the consent of
the Takeover Panel and (where required) the Court, agree):
1. Approval of the Scheme by a majority in number, representing three-fourths
in value, of the holders of the HW Shares, present and voting either in
person or by proxy, at the Court Meeting, or at any adjournment of the Court
Meeting.
2. The resolutions necessary or appropriate for the implementation of the
Scheme (in an agreed form) being duly passed at the Extraordinary General
Meeting.
3. The sanction of the Scheme and confirmation of the reduction of capital
involved therein by the Court (in both cases, without modification save as
agreed by both HW and TMP), an office copy of the Final Court Order and the
minute of such reduction attached thereto being duly delivered to the
Registrar of Companies for registration and registered and the Scheme thereby
becoming effective, by no later than 28 February 2000 (or such later date as
TMP and HW may agree and the Takeover Panel and (if required) the Court shall
approve).
4. The new TMP Shares to be issued to the holders of HW Scheme Shares in
accordance with the Transaction Agreement and the terms of the Scheme (subject
to any restrictions on particular holders of HW Scheme Shares) being capable
of being traded in the ordinary course and reported on NASDAQ from the
business day following the Effective Date.
5. TMP having received letters from BDO Seidman, LLP and BDO Stoy Hayward
dated within two business days prior to the date of the Final Court Order
confirming that the Acquisition should be treated as a 'pooling of interests'
for US GAAP if the Scheme is consummated.
6. TMP being reasonably satisfied that Section 3(a)(10) of the Securities Act
is applicable to the issue of TMP Shares under the Scheme and that
registration under the Securities Act of the new TMP Shares to be issued
pursuant to the terms of the Transaction Agreement and the Scheme is not
required.
7. TMP (a) having received from each person or entity who, at any time after
15 December 1999 and before the Effective Date, is, was, or became, an HW
Affiliate and has not already delivered the same, a properly executed
Affiliate Agreement; and (b) the provisions of such Affiliate Agreements
having been complied with by the HW Affiliates in all respects.
8. No government or governmental, quasi-governmental, supranational, statutory
or regulatory body, court, trade agency, professional association or any other
person, firm or body in any jurisdiction (each a 'Relevant Authority') having
decided to take, instituted, implemented or threatened any action,
proceedings, suit, investigation or enquiry, or made, proposed or enacted any
statute, regulation or order or taken any other steps and there not continuing
to be outstanding any statute, legislation or order thereof, which would or
might:
8.1 make the Acquisition or the Scheme or their respective implementation or
the acquisition of any HW Shares, or control of HW void, illegal or
unenforceable or otherwise restrict, restrain prohibit or otherwise interfere
with the implementation of, or impose additional conditions or obligations
with respect thereto, or otherwise challenge or interfere therewith;
8.2 require or prevent the divestiture by the HW Group or any associated
company or any company of which 20 per cent. or more of the voting capital is
held by the HW Group or any partnership, joint venture, firm or company in
which any member of the HW Group may be interested (the 'wider HW Group') or
by the TMP Group or any associated company or any company of which 20 per
cent. or more of the voting capital is held by the TMP Group or any
partnership, joint venture, firm or company in which any member of the TMP
Group may be interested (the 'wider TMP Group') of all or a material portion
of their respective businesses, assets or property or impose any material
limitation on the ability of any of them to conduct their businesses or own
their assets or property;
8.3 impose any limitation on the ability of any member of the wider HW Group
or the wider TMP Group to acquire or to hold or to exercise effectively any
rights of ownership of shares or loans or securities convertible into shares
in any member of the wider TMP Group or of the wider HW Group held or owned by
it or to exercise management control over any member of the wider TMP Group or
of the wider HW Group to an extent which is material in the context of the TMP
Group taken as a whole or, as the case may be, the HW Group taken as a whole;
8.4 require any member of the wider TMP Group or the wider HW Group to offer
to acquire any shares in any member of the wider HW Group owned by a third
party where such acquisition would be material in the context of the TMP Group
taken as a whole or, as the case may be, the HW Group taken as a whole; or
8.5 otherwise materially and adversely affect the business, profits or
prospects of any member of the wider TMP Group or of any member of the wider
HW Group,
and all applicable waiting and other time periods during which any such
Relevant Authority could decide to take, institute, implement or threaten any
such action, proceeding, suit investigation or enquiry having expired, lapsed
or been terminated.
9. All necessary filings having been made, all appropriate waiting periods
under any applicable legislation or regulations or any jurisdiction having
expired, lapsed or been terminated, in each case in respect of the Acquisition
and the implementation of the Scheme and the acquisition of any HW Shares, or
of control of HW, by TMP, and all authorisations, orders, recognitions,
grants, consents, licences, confirmations, clearances, permissions, reports,
valuations and approvals ('Authorisations') necessary or appropriate for, or
in respect of, the Acquisition and the implementation of the Scheme
(including, but not limited to, the allotment by HW of HW Shares to TMP or its
nominee out of the reserve arising on cancellation of the Scheme Shares) or
the proposed acquisition of any HW Shares, or for control of HW, by TMP and to
carry on the business of any member of the TMP Group or of the HW Group having
been obtained, in terms and in a form satisfactory to TMP, from all
appropriate Relevant Authorities and from persons or bodies with whom any
member of the TMP Group or the HW Group has entered into contractual
arrangements where the absence of any Authorisation would have a material
adverse effect on the HW Group taken as whole or on the TMP Group taken as a
whole or on the implementation of the Scheme or consummation of the
Acquisition, as the case may be, and all such Authorisations remaining in full
force and effect and there being no notice of an intention to revoke or not to
renew any of the same and all necessary statutory or regulatory obligations in
any jurisdiction having been complied with.
10. There being no provision of any arrangement, agreement, licence or other
instrument to which any member of the wider HW Group is a party or by or to
which any such member or any of their assets may be bound, entitled or be
subject and which, in consequence of the Acquisition or the Scheme or the
proposed acquisition of any HW Shares, or control of HW, by TMP or otherwise,
would or might, to an extent which is material result in:
10.1 any monies borrowed by, or the indebtedness actual or contingent of, any
such member of the wider HW Group being or becoming repayable or being capable
of being declared repayable immediately or prior to their stated maturity;
10.2 the creating of any mortgage, charge or other security interest over the
whole or any part of the business, property or assets of any such member or
any such security (whenever arising or having arisen) becoming enforceable;
10.3 any such arrangement, agreement, licence or instrument being terminated
or adversely modified or any action being taken of an adverse nature or any
obligation arising thereunder;
10.4 any such member ceasing to be able to carry on business under the name
under which it presently does so; or
10.5 the creation of liabilities by any such member.
11. Except as publicly announced by HW or as specifically disclosed in writing
to TMP, in each case prior to the date of this announcement or as disclosed in
the unaudited interim results of HW for the six months ended 30 September 1999
('the Interim Results'), no member of the wider HW Group having, since 31
March 1999:
11.1 issued or authorised or proposed the issue of additional shares of any
class, or securities convertible into, or rights, warrants or options to
subscribe for or acquire, any such shares or convertible securities (save as
between HW and wholly-owned subsidiaries of HW and save for options granted,
and for any HW Shares allotted upon exercise of options granted under the HW
Share Option Schemes) or redeemed, purchased or reduced any part of its share
capital;
11.2 (save for the interim dividend of 1.0p per HW Share for the 6 months
ended 30 September 1999, declared today) declared, paid or made or proposed to
declare, pay or make any bonus, dividends or other distributions in respect of
shares other than to other members of the wider HW Group;
11.3 authorised or proposed or announced its intention to propose any merger
or demerger or acquisition or disposal of assets or shares (other than in the
ordinary course of trading) or any change in its share or loan capital;
11.4 issued or proposed the issue of any debentures or (otherwise than in the
ordinary course of business) incurred any indebtedness or contingent liability
which is material in the context of the HW Group;
11.5 disposed of or transferred, mortgaged or encumbered any asset or any
right, title or interest in any asset which is material in the context of the
HW Group;
11.6 entered into any contract or commitment (whether in respect of capital
expenditure or otherwise) which is of a long-term or unusual nature or
involves or could involve an obligation of a nature or magnitude which is
material in the context of the HW Group;
11.7 entered into any reconstruction, amalgamation, transaction or arrangement
(otherwise than in the ordinary course of business) which is material in the
context of the HW Group;
11.8 taken any corporate action or had any order made for its winding-up,
dissolution or reorganisation or for the appointment of a receiver,
administrator, administrative receiver, trustee or similar officer of all or
any of its assets and revenues;
11.9 entered into or varied the terms of any service agreement with any of the
Directors of HW; or
11.10 entered into any agreement or commitment or passed any resolution with
respect to any of the transactions or events referred to in this paragraph 11.
12. Since 31 March 1999, except as publicly announced by HW, or as
specifically disclosed in writing to TMP, in each case prior to the date of
this announcement or as disclosed in the Interim Results:
12.1 there having been no material adverse change in the business, financial
or trading position or profits or prospects of any member of the HW Group; or
12.2 no litigation, arbitration, proceedings, prosecution or other legal
proceedings having been instituted, announced or threatened by or against or
remaining outstanding against any member of the wider HW Group which is
material in the context of the HW Group.
13. TMP not having discovered that:
13.1 the financial or business information concerning the wider HW Group as
contained in the information publicly disclosed at any time by any member of
the wider HW Group either contains a misrepresentation of a material fact or
omits to state a fact necessary to make the information contained therein not
misleading in any case which has not subsequently been corrected by such
disclosure (or except, in either case, disclosed in writing to TMP prior to
the date of this announcement) and in any event which is material in the
context of the wider HW Group taken as a whole; or
13.2 any member of the HW Group is subject to any liability, contingent or
otherwise, which is not disclosed in the annual report and accounts of the HW
Group of the financial year ended 31 March 1999 which liability (or
liabilities on an aggregated basis) is or are in the context of the HW Group
as a whole material or adverse.
14. In relation to any release, emission, disposal or other fact or
circumstance which causes or might cause pollution of the environment or harm
to human health, no past or present member of the HW Group having, in any
manner, to an extent which is likely to give rise to a material liability (i)
committed any violation of any laws, statutes, ordinances, regulations or
other requirements of any Relevant Authority; and/or (ii) incurred any
liability (whether actual or contingent) with respect thereto.
15. Consents in writing having been obtained from the requisite majority of
optionholders under each of the HW Share Option Schemes (other than the HW
Group PLC Employee Savings-Related Share Option Scheme) to amendments being
made to the rules of each such Share Option Scheme at the Extraordinary
General Meeting to permit options granted under each of such Share Option
Schemes to be exercisable in respect of TMP Shares as opposed to HW Shares
immediately following the Scheme becoming effective (or other arrangements
reasonably satisfactory to TMP being put in place in respect of all such
optionholders).
16. HW not having discovered that the financial or business information
concerning TMP as contained in its filings (a) under the Securities Act, as of
the dates the respective filings became effective, or (b) under the US
Securities and Exchange Act of 1934 (as amended), as of the dates the
respective filings became effective, contained any untrue statement of a
material fact or omitted to state any material fact necessary in order not to
make the statements made therein, in light of the circumstances under which
they were made, not misleading (in any case which has not subsequently been
corrected) and in any event which is material in the context of the wider TMP
Group taken as a whole.
17. Clearances having been received, in a form reasonably acceptable to the
directors of HW, from the Inland Revenue under section 138 of the Taxation of
Chargeable Gains Act 1992 and under section 707 of the Income and Corporation
Taxes Act 1988 for transactions involved in the Scheme.
TMP may waive all or any of the conditions set out in paragraphs 6 to 15
inclusive above, in its absolute discretion and TMP and HW may waive the
condition set out in paragraph 5 above by mutual agreement. HW may waive the
conditions set out in paragraphs 16 and 17 above.
APPENDIX III
Definitions
The following definitions apply throughout this announcement unless the
context requires otherwise:
'Acquisition' the proposed acquisition by TMP of HW to
be effected by means of the Scheme
'Acquisition Price' 130p per HW Share
'Affiliate Agreements' agreements to be entered into (in a form
agreed between TMP and HW) between the
Affiliates and TMP
'Affiliate' or 'HW any person who, 60 days prior to the
Affiliate' Effective Date, is an 'Affiliate' of HW
as such term is used for purposes of
paragraphs (c) and (d) of Rule 145 of
the Rules and Regulations of the SEC and
in the SEC's Accounting Series Releases
130 and 135, as amended (generally,
certain directors and principal
shareholders of HW)
'Beeson Gregory' Beeson Gregory Limited, which is
regulated by The Securities and Futures
Authority Limited and is a member of the
London Stock Exchange
'business day' a day (excluding Saturdays, Sundays and
public holidays) on which banks are open
for business in London and New York, or
either as specified
'City Code' The City Code on Takeovers and Mergers
'Combined Group' the TMP Group, as enlarged by the
Acquisition
'Companies Act' the Companies Act 1985 (as amended)
'Court' the High Court of Justice in England and
Wales
'Court Meeting' the meeting of holders of HW Shares to
be convened pursuant to an order of the
Court for the purposes of considering
and, if thought fit, approving the
Scheme
'Credit Lyonnais Credit Lyonnais Securities, which is
Securities' regulated by The Securities and Futures
Authority Limited and is a member of the
London Stock Exchange
'Daily Official List' the Daily Official List of the London
Stock Exchange
'Effective Date' the date of the registration of the
Final Court Order and the date on which
the Scheme becomes effective, which is
expected to be in February 2000
'Extraordinary General the extraordinary general meeting of HW
Meeting' Shareholders to be convened in
connection with the Scheme
'Final Court Hearing' the date on which the petition to enact
the Scheme is heard by the Court, which
is expected to be in February 2000
'Final Court Order' the order of the Court sanctioning the
Scheme under section 425 of the
Companies Act and confirming the
reduction of capital provided for by the
Scheme under section 137 of the
Companies Act
'HW' HW Group PLC
'HW Board' the board of directors of HW
'HW Group' HW and its subsidiary undertakings
'HW Shareholder' holders of HW Shares
'HW Share Option the HW Group PLC Approved Executive
Schemes' Share Option Scheme, the HW Group PLC
1997 Unapproved Executive Share Option
Scheme, the HW Group PLC 1998 Unapproved
Executive Share Option Scheme, and the
HW Group PLC Employee Savings-Related
Share Option Scheme
'HW Shares' ordinary shares of 1p each in the
capital of HW
'London Stock Exchange' London Stock Exchange Limited
'Meetings' the Court Meeting and the Extraordinary
General Meeting
'NASDAQ' the NASDAQ National Market automated
quotation system of the National
Association of Securities Dealers of the
United States
'Offer Period' the period commencing on 7 September
1999, being the date of the announcement
by HW that it had received approaches
that may or may not lead to an offer
being made for HW
'Record Date' the record date for the Scheme (which is
expected to be 5.00 p.m. (London time)
on the London business day immediately
preceding the date of the Final Court
Order)
'Scheme Circular' the circular proposed to be despatched
to HW Shareholder setting out the
details of the Acquisition and the
Scheme and certain information about HW
Group and the TMP Group and containing
the Scheme and notices of the Meetings
'Scheme' or 'Scheme of the proposed scheme of arrangement under
Arrangement' section 425 of the Companies Act
between HW and holders of Scheme Shares,
to be set out in the Scheme Circular
'Scheme Shares' the Scheme Shares as defined in the
Scheme Circular (generally, the HW
Shares on the Record Date)
'SEC' the US Securities and Exchange
Commission
'Securities Act' the US Securities Act of 1933, as
amended
'Takeover Panel' the Panel on Takeovers and Mergers
'TMP' TMP Worldwide Inc.
'TMP Group' TMP and its subsidiaries
'TMP Shares' shares of common stock, par value $0.001
per share, in TMP
'Transaction Agreement' an agreement, dated 24 November 1999,
between TMP and HW relating to the
implementation of the Acquisition and
the Scheme
'United Kingdom' or 'UK' the United Kingdom of Great Britain and
Northern Ireland
'United States' or the the United States of America, its
'US' territories and possessions, any state
of the United States of America, any
other areas subject to its jurisdiction
and the District of Columbia
'US GAAP' US generally accepted accounting
principles
In this announcement, unless otherwise stated, where the sterling equivalent
is given for a US dollar, or vice versa, the US dollar to sterling exchange
rate used is $1.626: £1 on 23 November 1999 (being the closing mid market
sterling/US dollar spot price published in the Financial Times (UK edition) on
24 November 1999). References to $ are to US dollars and references to £ are
to UK pounds sterling.
References to 23 November 1999 are to the close of business in London or
(where appropriate) New York on the last business day prior to the publication
of this announcement. For the purposes of this announcement, 'subsidiary' and
'subsidiary undertaking' have the respective meanings given by the Companies
Act.
24 November 1999
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