Principal activities and business review
The Group’s principal activities are the provision of recruitment, staffing, training and related services. A review of the Group’s activities during the year and its prospects for the forthcoming year is contained in the Chairman’s statement and operating and financial review. A segmental analysis of the results is set out in note 1 to the accounts.

Results and dividends
The profit attributable to ordinary shareholders amounted to £10,665,000 (31 December 2003: loss of £18,946,000). An interim dividend of 0.1p per share (31 December 2003: 0.1p) was paid on 15 November 2004. The Directors recommend a final dividend of 0.2p per share (31 December 2003: 0.1p) to be paid on 3 June 2005 to shareholders on the register on 1 April 2005.

Acquisitions and disposals
There have been no acquisitions or disposals during the year.

Directors
The Directors in office at 22 March 2005 are set out here.

Directors’ interests
Directors' interests, as defined by the Companies Act 1985, in the ordinary shares of the Company, all of which are beneficial, were as set out below:

	31 December 2004 Number		31 December 2003 Number
R T Barfield	35,000		35,000
W J Grubbs	10,000		10,000
T J Kalinske	17,996		17,996
B A Clark	117,857		151,857
P A Magowan	161,091		154,006

Between the Balance Sheet date and the date of this report the Directors' interests of
R T Barfield, W J Grubbs and B A Clark have each increased by 7,102 shares as a result of the exercise of options under the 2001 Savings Related Share Option Scheme.

Details of Directors’ interests in options are disclosed here.

Notifiable interests in shares
At 15 March 2005 the Company had been notified, in accordance with Sections 198 to 208 of the Companies Act 1985, of the following material holdings in the Company's issued share capital:

Employee involvement
The Group recognises that its competitive advantage depends upon the quality and motivation of the people it employs. Its employment policies, including the commitment to equal opportunity, are designed to attract, retain and motivate high calibre employees regardless of sex, race, religion or disability.

Environmental policy
The Group recognises its responsibility to achieve good environmental practice and to continue to strive for improvement in its environmental impact. In the execution of this policy Spring will ensure that wherever possible waste consumable materials are recycled or disposed of in a manner most suitable to reduce any impact on the natural environment. Spring actively encourages all staff to participate in the implementation of this policy and encourages all suppliers of consumable products and materials to be environmentally friendly, where practicable.

Treasury
The Group’s policies in respect of treasury management are as follows:

Financing
Working capital finance for day-to-day requirements is provided through operating cash generation supported by short-term overdraft and loan facilities totalling £45 million at 31 December 2004 with high quality UK banks. Funding for overseas operations is provided by equity paid for from UK cash resources. The overseas operations use a combination of local currency cash converted from equity consideration and sterling intercompany balances for working capital purposes.

Interest rates
The Group's policy is to minimise interest charges. Interest rates are managed using floating rate borrowing linked to UK base rates, including overnight rates where these are favourable.

Foreign currency
The Group has working capital and funding balances denominated in foreign currency.

Hedging
A minor proportion of trading activity is denominated in non-local currency, predominantly US Dollars or Euros; the Group looks to match the currency of the costs to that of the contracted revenue. Non-local currency assets are matched with equivalent currency liabilities with similar maturities. Where contracts involve significant net revenue or costs in non-local currency, the Group looks to mitigate the foreign exchange risk arising through the use of forward currency arrangements.

Borrowing powers
Under Article 1(B) of the Company's Articles of Association the borrowings of the Group are restricted to two times its aggregate capital and reserves. At 31 December 2004 the Group's aggregate capital and reserves amounted to £79,447,000.

Creditors payment policy
The Group agrees terms and conditions for its business transactions with suppliers. Payment is then made to these terms, subject to the terms and conditions being met by the supplier. At 31 December 2004 unpaid creditors of the Company amounted to 35 days of purchases (31 December 2003: 36 days).

Political and charitable donations
During the year the Group made charitable donations of £15,828 (31 December 2003: £7,193) and no political donations (31 December 2003: £nil).

Auditors
A resolution to re-appoint Ernst & Young LLP as the Group's auditor will be put to the forthcoming Annual General Meeting.

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 Company and of the Group and of the profit or loss of the Group for that year. 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; and

• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the accounts.

International Financial Reporting Standards
Spring Group plc, as a publicly traded company, will be required to adopt International Financial Reporting Standards (“IFRS”) together with revised International Accounting Standards (“IAS”), in issue at 31 March 2004, for their financial statements from 2005. Full year IFRS consolidated financial statements will be produced for the first time to 31 December 2005, with the first reported results under IFRS being our interims at 30 June 2005. This year’s consolidated financial statements remain in accordance with UK GAAP.

Spring has made significant progress in identifying and quantifying the key accounting changes and accounting policy differences that exist between UK GAAP and IFRS. These changes and differences and the likely impact on the Profit and Loss Account have been communicated and discussed internally on a regular basis. Where appropriate Spring has made changes to internal procedures and data collection systems to ensure additional data is adequately captured.

As a result of the work performed during 2004, the Group is confident that it will be able to fully comply with the accounting and reporting requirements of IFRS in 2005.

The key full year differences that affect Spring are the recognition of:

a) Share-based payments - Under UK GAAP, the cost of share options is based on the difference between exercise price and market value of the option at the date of grant and as such, grants made under the Group’s share option plans have generally not resulted in a charge to the profit and loss account. Under IFRS 2 “Share-based Payment”, the Group is required to measure the cost of all share options granted since 7 November 2002 that have not fully vested at 31 December 2004, using an option pricing model.

b) Goodwill amortisation - Under UK GAAP, the Group’s policy is to amortise capitalised goodwill on a straight-line basis over its estimated useful economic life of between 2 and 20 years. Under IFRS, instead of an annual charge to the profit and loss, an impairment review will be carried out at each balance sheet date, and this is required irrespective of there being an indicator of impairment in existence. If impairment is identified, the resulting debit will be charged to the profit and loss account, rather than the current amortisation charge made under existing UK GAAP.

This summary is not intended to be an exhaustive list. Further differences may arise as a result of the Group’s ongoing detailed assessment and interpretations of IFRS.

By order of the Board

Gavin Tagg
Company Secretary
22 March 2005