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  1. Segmental information
a) Turnover
  31
December
2004		   31
December 2003		  
  £000   £000  
Analysis by class of business
Continuing operations
        
Spring Technology Staffing Services (STSS) 415,794   291,341  
Spring Personnel 59,163   56,524  
hy-phen 1,472   498  
Total continuing operations 476,429   348,363  
Discontinued operations -   11,834  
Total turnover 476,429   360,197  


  31
December 2004		   31
December 2003		  
  £000   £000  
Geographical analysis by destination of supply        
United Kingdom 457,129   346,748  
Other Europe 14,519   10,575  
Other 4,781   2,874  
  476,429   360,197  

All turnover is derived from the United Kingdom.

b) Net assets 31
December
2004		   31
December
2003		  
  £000   £000  
Analysis by class of business
Trading net assets (liabilities)
STSS		 44,333   37,131  
Spring Personnel 4,607   2,742  
hy-phen (1,729 ) 498  
Head office (866 ) (5,164 )
Total trading net assets 46,345 ) 35,207  
Non-trading net assets (liabilities)        
Net funds 28,897   32,974  
Dividends (308 ) (153 )
Taxation 4,513   (420 )
Total 79,447   67,608  

c) Operating profit(loss)

  Operating profit/ (loss) before
except-ional
items and
good-will
amort-isation		   Excep-tional
items
(Note 3)
   Good-will
amort-isation
   Total
31 Dec-ember 2004		   Operating profit/ (loss) before
excep-tional
items and
good-will
amort-isation		   Excep-tional
items
(Note 3)		   Good-will
amort-isation		   Total
31 Dec-ember 2003		  
  £000   £000   £000   £000   £000   £000   £000   £000  
STSS
 11,002   (599 ) (2,050 ) 8,353   4,715   (3,493 ) (1,273 ) (51 )
Spring Personnel 2,651   -   -   2,651   2,161   (158 ) -   2,003  
hy-phen (706 ) -   –   (706 ) (1,416 ) (167 ) -   (1,583 )
Central costs (3,937 ) -   -   (3,937 ) (3,606 ) (462 ) -   (4,068 )

Continuing operations

 9,010   (599 ) (2,050 ) 6,361   1,854   (4,280 ) (1,273 ) (3,699 )

Discontinued
operations

 -   -   -   -   (1,759 ) (1,631 ) (34 ) (3,424 )
Total 9,010   (599 ) (2,050 ) 6,361   95   (5,911 ) (1,307 ) (7,123 )

  2. Net operating expenses
31
December
2004 		31
December
2003
£000 £000
Net operating expenses are as follows:
Selling and distribution costs 17,041 15,421
Administration costs 34,862 38,876
51,903 54,297


Administration costs include goodwill amortisation of £2,050,000 (31 December 2003: £1,307,000) and exceptional items of £599,000 (31 December 2003: £4,721,000).

Selling and distribution costs for the prior year include exceptional items of £1,190,000.

Costs relating to discontinued activities in the prior year were cost of sales £7,008,000, selling and distribution costs of £2,477,000 and administration costs of £5,773,000.



31
December
2004
31
December
2003
£000 £000
Operating profit (loss) is stated after charging (crediting):
Exceptional items (note 3) 599 5,911
Depreciation – owned assets
1,226 2,131
  – assets held under finance leases
- 17
Profit on sale of fixed assets (96 ) (57 )
Goodwill amortisation 2,050 1,307
Operating lease rentals – land and buildings
2,463 3,486
  – other assets
539 503
Auditors’ remuneration – for audit work
170 212
  – for other services
97 145


Audit remuneration for audit work on the Company was £45,000 (2003: £48,000). Other services performed by the auditors during the year comprised professional services connected with taxation, accounting technical advice and corporate governance matters.

£252,000 was paid to the auditors during the prior year for professional services connected with acquisitions and has been included in the relevant cost of investment.



  3. Exceptional items
Exceptional items comprise:
  Total
£000		   Tax effect
£000 		  Net
31 Dec 2004
£000		   Total
£000		   Tax effect
£000		   Net
31 Dec 2003
£000		  
Property reorganisation costs (500)   150   (350 ) 1,821   (449 ) 1,372  
Reorganisation and redundancy costs 1,099   (150 ) 949   3,918   (1,020 ) 2,898  
Other costs -   -   -   172   52   120  
  599   -   599   5,911   (1,152 ) 4,390  

Property reorganisation costs in 2004 relate to a release of excess vacant property provisions, reorganisation and redundancy costs in 2004 consists of a £599,000 UITF 17 charge for share options granted at below market value to the directors of Best at acquisition (2003: £299,000) and £500,000 relating to a management restructuring within the STSS business. The tax effect shows the amount by which the taxable losses of the Group have changed due to exceptional items.


  4. Interest payable
  31
December
2004		 31
December
2003
£000 £000
On finance leases - 1
On loan notes 226 102
On bank overdrafts 508 -
734 103
   
  5. Taxation
a) Tax on profit (loss) on ordinary activities
  31
December
2004		 31
December
2003
£000 £000
Current tax:        
UK Corporation tax on profits of the year 3   -  
Foreign tax: 121   -  
Total current tax (note5 (b)) 124   -  


Deferred tax		        
Origination and reversal of timing differences (4,947 ) -  
  (4,823 ) -  
 

b) Factors affecting current tax charge

The tax charge on the profit (loss) on ordinary activities for the year is different to the standard rate of Corporation tax in the UK of 30% (2003: 30%). The differences are reconciled below:
  31
December
2004
31
December
2003
£000 £000
Profit (loss) on ordinary activities before tax 5,842   (18,946 )
Profit (loss) on ordinary activities multiplied by standard rate of Corporation tax in the UK of 30% (2003: 30%) 1,753   (5,684 )
Expenses not deductible for tax purposes (including goodwill amortisation) 805 4,533
Tax allowances in excess of depreciation (353 ) 101  
Tax relief on share options exercised during the year (496 ) -  
Other timing differences (320 ) 86
(Utilisation) increase in brought forward tax losses (1,374 ) 964  
Non recoverable overseas withholding tax 109   -  
Total current tax (note 5 (a)) 124   -  

Group
Company
  31
December
2004
£000		 31
December
2003
£000		 31
December
2004
£000		 31
December
2003
£000
Analysis of deferred tax        
Depreciation in excess of capital allowances 1,236 - 84 -
Other short term timing difference 39 - - -
Tax losses carried forward 3,672 - - -
Deferred tax asset carried forward (see note 12) 4,947 - - -

Group

Company
  31
December
2004
£000		 31
December
2003
£000		 31
December
2004
£000		 31
December
2003
£000
Analysis of unrecognised
deferred tax 		       
Depreciation in excess of
capital allowances 		- 2,405 - 129
Other short term timing differences 197 737 191 131
Tax losses carried forward 3,220 7,050 1,684 606
3,417 10,192 1,875 866

c) Factors that may affect future tax charges

The Group has recognised deferred tax assets where there are forecast taxable profits from which the future reversal of the underlying timing difference and tax losses can be deducted. Unrecognised deferred tax assets in respect of losses arising in the UK of £10,732,000 (2003: £23,500,000) are available for offset against future taxable profits of those companies in which the losses arose. Should future profits be higher in those companies with losses where no deferred tax asset has been recognised, future tax charges may be reduced. Where losses are utilised in those companies in which a deferred tax asset has been recognised and losses are incurred in those companies where no deferred tax asset is recognised, it may result in a future tax charge that is higher than the standard rate of Corporation Tax.



  6. Dividends
31 December 2004 31 December 2003
  £000 p per share £000 p per share
Interim 153 0.1 146 0.1
Final 308 0.2 153 0.1
461 0.3 299 0.2

The interim dividend was paid on 15 November 2004. The final dividend will be paid on 3 June 2005 to shareholders on the register on 1 April 2005.


  7. Earnings (loss) per share
   
31 December 2004 31 December 2003
 
Earnings
£000
 p per share Loss
£000		 p per share
Basic earnings (loss) per share 10,665   7.00   (18,946 ) (12.92 )
Diluted earnings (loss) per share 10,665   6.80   (18,946 ) (12.92 )


The calculation of basic earnings (loss) per share is based on the weighted average number of shares in issue during the year of 152,347,947 (31 December 2003: 146,591,009). The weighted average number of shares for the calculation of the diluted earnings per share for the year is 156,835,567. The weighted average number of shares for the calculation of the diluted loss per share for the prior year is the same as that for the basic loss per share, as the exercise of share options would have the effect of reducing the loss per ordinary share and is therefore not dilutive under the terms of FRS14.

As detailed in note 17 the Company holds an investment in its own shares through an ESOP trust. These shares are excluded from the calculation of the weighted average number of shares in issue as rights to dividends have been waived. The impact of this is to reduce the weighted average number of shares for the period by 4,716,717 shares (31 December 2003: 4,837,925 shares).



  8. Employees
Staff costs, including remuneration paid to Directors with service contracts, were as follows:
  31
December
2004
31
December
2003
£000 £000
Wages and salaries 32,881 36,973
Social security costs 3,700 3,822
Pension costs 700 838
37,281 41,633
The average number of people, including Directors with service contracts, who were employed by the Group during the year was as follows:
 
31
December
2004
No.
31
December
2003
No.
STSS 678 693
Spring Personnel 244 250
hy-phen 43 33
Head Office 66 64
Discontinued operations - 155
1,031 1,195

Details of Directors’ emoluments, pension contributions and interests in share options and payments following leaving office are included in the Report of the Board on Directors’ remuneration.


  9. Intangible fixed assets
Group         Goodwill
£000		  
Cost            
1 January 2004 and 31 December 2004         22,754  
Amortisation            
1 January 2004         6,848  
Charge for the year         2,050  
31 December 2004         8,898  
Net book value            
31 December 2004         13,856  
31 December 2003         15,906  

Goodwill on acquisitions is being amortised over the Directors’ estimate of their useful economic life which, is between 5 and 10 years.


  10. Tangible fixed assets
Freehold Property
Leasehold improve-
ments
Furniture
and IT
equipment
Motor
vehicles

 

 Total
Group £000
£000
£000 £000 £000
Cost
1 January 2004 206 1,650 10,294 112 12,262
Additions - 174 2,066 - 2,240
Disposals (143 ) (346 ) (1,774 ) (37 ) (2,300 )
31 December 2004 63 1,478 10,586 75 12,202
Depreciation
1 January 2004 41 993 8,042 47 9,123
Charge for the year 6 201 994 25 1,226
Disposals (29 ) (346 ) (1,763 ) (32 ) (2,170 )
31 December 2004 18 848 7,273 40 8,179
Net book value
31 December 2004 45 630 3,313 35 4,023
31 December 2003 165 657 2,252 65 3,139

The net book value of freehold properties comprise solely of buildings.

During the year ended 31 December 2004£315,000 (2003: £nil) of own costs directly attributable to the construction or acquisition of tangible fixed assets were capitalised and are included in Furniture and IT equipment.

  Leasehold improve-
ments
Furniture
and IT
equipment
Motor
vehicles

 

 Total
Group £000
£000
£000 £000 £000
Cost
1 January 2004   29 523 34 586
Additions   8 1,017 - 1,025
Disposals     -   (167 ) (34 ) (201 )
31 December 2004   37 1,373 - 1,410