CPL RESOURCES PLC. For the year ended 30 June 2004 Together with Directors and Auditors Reports

CPL RESOURCES PLC A N N U A L R E P O R T 2 0 0 4 W o r k i n g f o r y o u cpl - Placing People First www.cpl.ie For the year ended 30 June 2004 Together with Directors and Auditors Reports

CONTENTS Directors and other information 2 Chairman s statement 4 Chief executive s review 5 Directors report 7 Statement of directors responsibility 12 Independent auditors report 13 Statement of accounting policies 15 Consolidated profit and loss account 17 Consolidated balance sheet 18 Consolidated cash flow statement 19 Company balance sheet 20 Notes forming part of the financial statements 21 Directors Report and Consolidated Financial Statements Year ended 30 June 2004 Page 1

DIRECTORS AND OTHER INFORMATION Directors Secretary Registered office Auditors Solicitors Principal bankers John Hennessy (Chairman) Anne Heraty Paul Carroll Patrick Garvey (Non-Executive) Garret Roche Josephine Tierney All of 83 Merrion Square, Dublin 2 Wilton Secretarial Limited First Floor Fitzwilton House Wilton Place Dublin 2 83 Merrion Square Dublin 2 KPMG Chartered Accountants 1 Stokes Place St. Stephen's Green Dublin 2 William Fry Limited Fitzwilton House Wilton Place Dublin 2 AIB Plc 62 St Brigid s Road Artane Dublin 5 Registrars and paying agents Computershare Services Limited Heron House Corrig Road Sandyford Industrial Estate Dublin 18 UK paying agents Computershare Services Limited 4th Floor, Caxton House Redcliff Way, Bristol BS99 7NH England Page 2 Directors Report and Consolidated Financial Statements Year ended 30 June 2004

DIRECTORS AND OTHER INFORMATION (continued) Board of Directors John Hennessy Patrick Garvey * Anne Heraty Paul Carroll Garret Roche (non-executive chairman) (non-executive) (executive) (executive) (executive) Josephine Tierney (executive) * Chairman of the Audit and Nomination and Remuneration Committees Both of the non-executive directors are members of the Audit and Nomination and Remuneration Committees John Hennessy, chairman, joined the board of Cpl Resources Plc in 1999. He is a practicing barrister and a chartered accountant. The nominated senior independent director is Patrick Garvey, who joined the board in 1999. He is a director of a number of technology companies. A. Heraty, P. Carroll and G. Roche each entered into service agreements dated 22 June 1999 with the group in respect of their appointment as executive directors. J. Tierney entered into a service agreement dated 1 July 2001 with the group in respect of her appointment as an executive director. J. Hennessy and P. Garvey each entered into an engagement letter dated 22 June 1999 with the company in respect of their appointment as non-executive directors of the company. All directors are required to present themselves for re-election every three years. Directors Report and Consolidated Financial Statements Year ended 30 June 2004 Page 3

CHAIRMAN S STATEMENT I am delighted to report an excellent operational and financial performance for the year ended 30 June 2004. Group turnover increased by 41% over the prior year to 73.9 million. The Group s gross profit (i.e. net fee income) grew by 25% to 13.3 million. Pre-tax profits increased by 49% to 2.6 million. Fully diluted earnings per share were 5.9 cent, up by 55% from 3.8 cent in 2003. Notwithstanding the increased demands on our working capital caused by this strong growth, the Group has continued to generate positive cash-flows during the year through a combination of tight cost control, excellent working capital management and the cash generative nature of the Group s mix of services. The net cash balance at 30 June 2004 was 5.3 million. A final dividend of 0.6 cent per share is proposed, bringing the total dividend for the year to 1 cent per share. This strong performance is the result of a lot of hard work by a committed and dedicated team, combined with the effective implementation of a strategy to diversify into new sectors and to drive growth, particularly in the recruitment and placement of temporary and contract personnel in a variety of industries. The average number of temporary employees in the Group has grown very significantly in the year to 30 June 2004. We are committed to continuing to develop this aspect of our product mix, as we believe that it offers a very attractive alternative to permanent placement for many businesses. The Group now operates in a wide spread of business sectors, including technology, accounting and finance, sales, engineering, light industrial, healthcare and pharmaceutical, and office administration. Most of these sectors showed strong growth in the year ended 30 June 2004. In March 2004, the Group acquired Medical Personnel Ltd, a provider of temporary and permanent employees to the healthcare sector. This acquisition, which has already been integrated into the Group, will allow us to take advantage of the growth opportunities available in the healthcare sector. The Group has emerged in excellent financial and operational shape from a period when the economic and business environment was uncertain and challenging. Our business strategy of diversifying through selective acquisitions and focused business development while managing costs carefully has served us well. We have experienced better trading conditions during the year in most of our business sectors and we are very well positioned to take advantage of continued improvement. Since 30 June 2004 the business has continued to perform well and we are cautiously optimistic about the outlook for further profitable growth in the Group in the current year. I would like to thank our employees for their contribution to the Group s achievements this year. Our position as Ireland s leading provider of employment services is the result of the skill and dedication of an excellent team throughout our organisation. I am very proud of their achievements and very grateful to them for their outstanding contributions, individually and collectively, to the success of our business. I would also like to extend my appreciation to our customers for their continued loyalty and support. We are looking forward with confidence to another challenging year in Cpl. John Hennessy 7 September 2004 Page 4 Directors Report and Consolidated Financial Statements Year ended 30 June 2004

CHIEF EXECUTIVE S REVIEW The past year has been one of strong growth for Cpl Resources plc. Increases in both permanent and temporary fee income alongside tight control of costs resulted in a 49% increase in profit before tax for the year to 30 June 2004. Demand for our services was particularly strong in the second half of the year, and profit before tax for the second half was 1.6 million, a 73% increase over the first half and up 59% on the corresponding period last year. Our strategy of developing a balanced earnings stream has continued to prove successful. We continued to diversify the group s operations across a number of key business sectors in order to avoid overdependence on any one sector. We have balanced our net fee income between Temporary and Permanent recruitment - 51% permanent and 49% temporary - and we have balanced our operations between specialist and generalist recruitment - 73% specialist and 27% generalist. During the year Cpl provided long or short term work assignments to over 10,000 people and we placed over 1,750 people in permanent employment. In March 2004 we acquired Medical Personnel Ltd., a leading provider of nursing personnel to public and private sector hospitals. This company has been integrated into the group and now trades as Medical Recruitment Specialists Ltd. In February 2004 we acquired the business of Thornshaw Scientific Recruitment. This business services clients in the pharmaceutical and clinical research industries and complements Cpl s Science Division. Financial Results Group revenue increased by 41% to 73.8 million (June 2003: 52.4 million). Organic growth in revenues was 35% while acquisitions contributed 6%. Net fee income increased by 25% to 13.2 million (June 2003: 10.6 million). Operating expenses increased by 20% to 10.4 million (June 2003: 8.7 million). The most significant increase in expenses was the hiring of additional people to drive growth. The number of corporate employees rose from 127 to 165 (up 30%). Profit before tax increased by 49% to 2.56 million (June 2003: 1.72 million). Diluted earnings per ordinary share rose by 2.1 cent to 5.9 cent (June 2003: 3.8 cent), an increase of 55%. We ended the year with cash balances of 5.3 million (June 03: 6.4 million), a very good result considering the 41% increase in sales and the acquisition of Medical Personnel Ltd. Operations Review We are passionate about the quality of service we provide to our clients and as a result we won a high level of repeat business. We also expanded our client base by winning new business. During the year we worked with over 1,500 clients, ranging from large multinationals, to mid-sized and small companies. All of our divisions experienced significant growth. The performance of each division is outlined below. Cpl is the leading recruitment specialist in Ireland in the ICT contract and permanent market. Demand was weak in the first half of the year for permanent IT and Telecoms professionals; however there was a healthy increase in demand in the second half. Contractor numbers remained steady throughout the year. Overall net fee income increased by 25%. Careers Register provides experienced accounting and finance, risk management, internal audit and financial services professionals to clients on a permanent and temporary basis. Net fee income for the year increased by 28%. Growth in the number of finance professionals working on a temporary basis has continued to increase. We believe this is as a result of increased demand from clients, who want to access specialist skills and expertise. In addition, the number of finance professionals seeking to work on a project basis has increased, due to a desire for more flexible working arrangements. Tech Skills Resources achieved outstanding results in the year to June 2004. This business provides contract and permanent engineering professionals to a broad range of clients. Its net fee income increased by 220% in the year to June 2004. Directors Report and Consolidated Financial Statements Year ended 30 June 2004 Page 5

CHIEF EXECUTIVE S REVIEW (continued) Ann O Brien provides a full range of office professionals from administrative coordinators and customer service specialists to office managers on a temporary and permanent basis. We have offices in the city centre, Blanchardstown and Naas and we opened a new office in Stillorgan in April of this year. The temporary services division performed particularly well and the number of temporary staff on assignment through Ann O Brien increased by 35%. Cpl Science and Thornshaw Scientific specialise in the placement of permanent and contract personnel in the pharmaceutical, biotechnology, clinical research and medical device industries. The number of contractors working on site for clients increased significantly. The pharmaceutical sector is a fast growing sector for the Cpl group, and net fee income from this division increased by 38%. Since its launch in February 2002 Medical Recruitment Specialists has focused on the provision of qualified healthcare staff to the public and private sectors. The year to June 2004 was a very good year with net fee income up 150%. The acquisition of Medical Personnel Ltd in March 2004 has strengthened our presence in the contract nurse recruitment market. We expect demand in this sector to continue to grow due to the shortage of qualified healthcare personnel. Multiflex provides light industrial personnel to a range of manufacturing clients to assist them with peak workloads. This division performed strongly during the year, increasing net fee income by 31%. We expanded our client base and we see significant opportunity for further development with local offices. People Attracting and retaining talented people is our highest priority. Our ability to grow and the quality of our services are dependent on the skills and ability of our people. I would like to thank our management team, recruiters and back office support team for their hard work and persistence. Outlook We had a strong second half to June 2004 and that momentum has continued into the current year. We have made investments in people, infrastructure and back office technology. As a result we believe we are well positioned to take advantage of the improved economic conditions. Anne Heraty 7 September 2004 Page 6 Directors Report and Consolidated Financial Statements Year ended 30 June 2004

DIRECTORS REPORT The directors present their annual report and audited consolidated financial statements for the year ended 30 June 2004. Principal activities and business review Cpl Resources Plc is the leading Irish employment services organisation, specialising in the placement of candidates in permanent, temporary and contract positions. The group s principal activities cover the areas of technology, accounting and finance, sales, engineering, light industrial, healthcare/ pharmaceutical, office administration and consultancy. Cpl Resources Plc is the holding company for the group s six operating subsidiaries: Computer Placement Limited, Cpl Solutions Limited, Careers Register Limited, Multiflex Limited, Tech Skills Resources Limited and Medical Recruitment Specialists Limited. Results and dividends The chief executive s review on pages 5 to 6 contains a comprehensive review of the operations of the group for the year. The audited financial statements for the year are set out on pages 15 to 34. The profit for the year ended 30 June 2004 amounted to 2.2 million (2003-1.4 million). Earnings per share for the year amounted to 6.0 cent (2003: 3.8 cent). An interim dividend of 0.4 cent per share (2003-0.3 cent) was paid during the year. A final dividend of 0.6 cent per share (2003-0.4 cent) is proposed by the directors. No further dividends or transfers to reserves are recommended by the directors. Shareholders funds at 30 June 2004 amounted to 15.3 million (2003-13.4 million). Directors There were no changes in directors or secretary during the year or subsequent to the year end. Directors and secretary and their interests The directors and secretary who held office at 30 June 2004 had no interests other than those shown below in the shares in the company or group companies. No. of Shares No. of Shares 30 June 2004 30 June 2003 Name of director Anne Heraty * 19,907,764 14,785,913 Paul Carroll* 6,234,061 14,785,912 Garret Roche - 123,192 John Hennessy 625,000 625,000 Patrick Garvey 82,450 82,450 Josephine Tierney - - William Fry Limited (Secretary) - - * Anne Heraty and Paul Carroll are husband and wife. Directors Report and Consolidated Financial Statements Year ended 30 June 2004 Page 7

DIRECTORS REPORT (continued) In addition to the above, G. Roche held 110,000 share options at 30 June 2004 (30 June 2003 220,000), having exercised 110,000 options in January 2004 at 0.10 per share when the market price of the shares was 0.85. These options are exercisable at any time up to June 2006 at 0.10 per share. J. Tierney held 40,000 share options at 30 June 2004 (30 June 2003 40,000). These options are exercisable between October 2004 and October 2008 at 0.40 per share. A. Heraty and P. Carroll together hold 71% (2003: 81%) of the share capital of the company. The company has not been notified of any other shareholdings in excess of 3%. There have been no changes in the interests of the directors, the secretary and their families in the share capital of the company between 30 June 2004 and 7 September 2004. Other than as disclosed above and in note 21 of the financial statements, none of the directors had a beneficial interest in any material contract with the company or any of its subsidiaries during the year ended 30 June 2004. Corporate governance The Irish Stock Exchange requires Irish registered companies to include statements of compliance with the Combined Code. The key components of the group s system of corporate governance are as described below. Board of directors The board is made up of both executive and non-executive directors. Directors are selected through a formal process, and directors appointments are approved by the board and the shareholders. On appointment, each director received training, as appropriate, from the group s advisors. The current non executive directors were not appointed for specific terms; they are, however, required to stand for re-election every three years. The board of directors currently comprises four executive and two non-executive directors. Both non-executive directors are considered independent. The agreed list of matters which the board has formally reserved to itself for decision include overall group strategy, acquisition and divestment policy, approval of major capital expenditure projects and associated matters such as group funding and treasury policy. It also reviews the strategic direction of the group's operations and monitors group performance against agreed objectives. The board agrees a schedule of regular meetings to be held in each calendar year and also meets on other occasions as necessary. Full board papers are sent to each director in sufficient time before board meetings, and any further supporting papers and information are readily available to all directors on request. There is an agreed procedure for directors to take independent professional advice. The board has a process whereby each year every director meets the chairman to review the conduct of board meetings and the general corporate governance of the group. The roles of chairman and chief executive are separate. The non-executive directors are independent of management and, save as disclosed, have no material interests or other relationship with the group. All of the directors bring independent judgement to bear on issues of strategy, performance, resources, key appointments and standards. Page 8 Directors Report and Consolidated Financial Statements Year ended 30 June 2004

DIRECTORS REPORT (continued) Board committees The board delegates certain responsibilities to board committees and has established an Audit Committee and a Nomination and Remuneration Committee. Audit committee The Audit Committee may examine any matters relating to the financial affairs of the group, including review of the financial statements, internal control procedures, accounting policies, the appointment and fees of external auditors and such other related functions as the board may require. Nomination and Remuneration committee The terms of reference for the Nomination and Remuneration Committee are to determine the group s policy on executive remuneration, to advise the board on new board appointments, and to consider the scale and structure of remuneration packages for the executive directors with due regard to the need to attract and retain high quality executives; developments in the marketplace; and the interests of the shareholders. The chief executive is consulted in respect of remuneration proposals for executive directors. No executive director participates in the determination of his/her own remuneration package. The committee also considers the remuneration of non-executive directors from time to time. The committee may draw on independent external advice, as deemed necessary. In framing Remuneration Policy, the Remuneration Committee has had regard to Section B of the Best Practice provisions annexed to the Listing Rules. In addition, the company has complied fully with the Irish Stock Exchange's requirement in relation to the disclosure of directors' remuneration and its Best Practice provisions as contained in Section A of the Listing Rules. Share option scheme Under the terms of a share option scheme established on 3 June 1999, at 30 June 2004 507,000 (30 June 2003 801,000) options in respect of ordinary shares had been granted to employees of the group. During the year 279,000 options at 0.10 per share were exercised and 15,000 options lapsed. 279,000 of the outstanding options are exercisable at 0.10 per share at any time up to June 2006. The remaining 228,000 options are exercisable at 0.40 per share between October 2004 and October 2008. During the year, the lowest and highest share prices were 0.25 and 1.10 respectively. At the year end, the share price was 0.95. Remuneration policy The group s policies on remuneration reflect market conditions, in order to attract, retain and motivate executive directors and senior management of the requisite quality. The Nomination and Remuneration Committee reviews the performance of the group from time to time and may, at its absolute discretion, determine performance related bonuses for executive directors. Liaison with shareholders The board regards each Annual Report as a key document for communication with investors, and carefully considers its form and content, in conjunction with its professional advisors. The board looks forward to meeting shareholders at the company s Annual General Meeting. Directors Report and Consolidated Financial Statements Year ended 30 June 2004 Page 9

DIRECTORS REPORT (continued) Internal control The Combined Code of the Stock Exchange Listing Rules states that: 1. The board should maintain a sound system of internal control to safeguard shareholders investment and group assets. 2. The directors should, at least annually, conduct a review of the effectiveness of the group s system of internal control and should report to shareholders that they have done so. The review should cover all controls, including financial, operational and compliance controls and risk management. The directors have overall responsibility for the group s system of internal control and have delegated responsibility for the implementation of this system to executive management. This system includes financial controls which enable the board to meet its responsibilities for the integrity and accuracy of the group s accounting records. The board has also established a process of compliance which addresses the board s wider responsibility to maintain, review and report on all internal controls, including financial, operational and compliance risk management. Among the processes applied in reviewing the effectiveness of the system of internal controls are the following: Budgets are prepared for approval by executive management and inclusion in a group budget approved by the board. Expenditure and income are regularly compared to previously approved budgets. The board establishes treasury risk policies, as appropriate, for implementation by executive management. All material commitments for expenditure and payments are compared to previously approved budgets and are subject to prior approval by personnel designated by the board of directors. Regular management meetings take place to review financial and operational activities. Cash flow forecasting is performed on an ongoing basis to ensure efficient use of cash resources. Regular financial results are submitted to and reviewed by the board of directors. The directors, through the Audit Committee, review the effectiveness of the group s system of internal financial control. A review of the effectiveness of the system of internal control was carried out during the year to 30 June 2004. The directors considered that the procedures necessary to implement the Turnbull guidelines on the Combined Code have been properly established. Compliance The board believes that it complies with the Combined Code except for the following: (i) (ii) the current non-executive directors were not appointed for specific terms. They are, however, required to retire by rotation from the board every three years but may stand for re-election. the Audit and Nomination and Remuneration Committees comprise two non executive directors only. The Board notes that this will not represent non compliance with the revised combined code, which will take effect for the group from 1 July 2004. Page 10 Directors Report and Consolidated Financial Statements Year ended 30 June 2004

DIRECTORS REPORT (continued) Health and safety of employees The Health and Safety at Work Act, 1989 imposes certain obligations on employers. The group has taken appropriate measures to ensure that health and safety standards comply fully with all such obligations. Post balance sheet events There were no important events since year end which would require disclosure in the financial statements. Political donations The company made no political donations during the year. Accounting records The directors believe that they have complied with the requirement of Section 202 of the Companies Act, 1990 with regard to books of account by employing personnel with appropriate expertise and by providing adequate resources to the financial function. The books of account are maintained at the company s premises at 26 Lower Baggot Street, Dublin 2. Auditors In accordance with Section 160 (2) of the Companies Act, l963, the auditors, KPMG, Chartered Accountants, will continue in office. On behalf of the Board J. Hennessy A. Heraty 7 September 2004 Directors Report and Consolidated Financial Statements Year ended 30 June 2004 Page 11

STATEMENT OF DIRECTORS RESPONSIBILITIES Company law requires the directors to prepare financial statements, for each financial year, in accordance with applicable Irish law and accounting standards, which give a true and fair view of the state of affairs of the company and group and of the profit and loss for that year. In preparing those financial statements, the directors are required to: select suitable accounting policies and then apply them consistently make judgements and estimates that are reasonable and prudent prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping proper books of account which disclose with reasonable accuracy at any time the financial position of the company and the group and to enable them to ensure that the financial statements comply with the Companies Acts, 1963 to 2003 and all Regulations to be construed as one with the Acts. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities. On behalf of the Board J. Hennessy A. Heraty Page 12 Directors Report and Consolidated Financial Statements Year ended 30 June 2004

INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS OF CPL RESOURCES PLC We have audited the financial statements on pages 15 to 34. This report is made solely to the company s members, as a body, in accordance with section 193 of the Companies Act, 1990. Our audit work has been undertaken so that we might state to the company s members those matters we are required to state to them in an auditors report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors The directors are responsible for preparing the Annual Report. As described on page 12 this includes responsibility for preparing the financial statements in accordance with applicable Irish law and accounting standards. Our responsibilities, as independent auditors, are established in Ireland by statute, the Auditing Practices Board, the Listing Rules of the Irish Stock Exchange, and by our profession s ethical guidance. We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Acts. As also required by the Acts, we state whether we have obtained all the information and explanations we require for our audit, whether the company s balance sheet is in agreement with the books of account and report to you our opinion as to whether the company has kept proper books of account; the directors report is consistent with the financial statements; at the balance sheet date a financial situation existed that may require the company to hold an extraordinary general meeting, on the grounds that the net assets of the company, as shown in the financial statements, are less than half of its share capital. We also report to you if, in our opinion, information specified by law regarding directors remuneration and transactions with the group is not disclosed. We review whether the statement on page 8 reflects the company s compliance with the seven provisions of the Combined Code specified for our review by the Listing Rules, and we report if it does not. We are not required to consider whether the board s statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the group s corporate governance procedures or its risk and control procedures. We read the other information contained in the Annual Report, including the corporate governance statement, and consider whether it is consistent with the audited financial statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Basis of audit 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 financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the group 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 financial statements 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 financial statements. Directors Report and Consolidated Financial Statements Year ended 30 June 2004 Page 13

INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS OF CPL RESOURCES PLC (continued) Opinion In our opinion, the financial statements give a true and fair view of the state of affairs of the group and the company as at 30 June 2004 and of the profit of the group for the year then ended and have been properly prepared in accordance with the Companies Acts, 1963 to 2003 and all Regulations to be construed as one with those Acts. We have obtained all the information and explanations we considered necessary for the purposes of our audit. In our opinion, proper books of account have been kept by the company. The balance sheet of the company is in agreement with the books of account. In our opinion, the information given in the directors report on pages 7 to 11 is consistent with the financial statements. The net assets of the company, as stated in the balance sheet on page 20, are more than half of the amount of its called up share capital and, in our opinion, on that basis there did not exist at 30 June 2004 a financial situation which, under Section 40(1) of the Companies (Amendment) Act, 1983, would require the convening of an extraordinary general meeting of the company. Chartered Accountants Registered Auditors 7 September 2004 Page 14 Directors Report and Consolidated Financial Statements Year ended 30 June 2004

STATEMENT OF ACCOUNTING POLICIES For the year ended 30 June 2004 The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the group financial statements. Basis of preparation The financial statements are prepared in euro in accordance with generally accepted accounting principles under the historical cost convention and comply with financial reporting standards of the Accounting Standards Board, as promulgated by The Institute of Chartered Accountants in Ireland. Basis of consolidation The group financial statements consolidate the financial statements of the company and all of its subsidiary undertakings made up to 30 June 2004. The results of subsidiary undertakings acquired or disposed of in the year are included in the consolidated profit and loss account from the date of acquisition or up to the date of disposal. Upon the acquisition of a business, fair values are attributed to the identifiable net assets acquired. Goodwill arising on acquisitions is dealt with as set out below. Turnover Turnover represents amounts receivable for services provided in the normal course of business, net of trade discounts and Value Added Tax. Turnover in respect of permanent placements is recognised when the candidate commences employment. Turnover in respect of the group s contractors and temporary employees is recognised when the related hours have been worked. Tangible fixed assets Tangible fixed assets are stated at cost less accumulated depreciation. Depreciation is provided on all tangible fixed assets on a straight line basis at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life as follows: Years Buildings 50 Equipment 3-8 Fixtures & fittings 10 Motor vehicles 3 Provision is made for any impairment. Goodwill Goodwill arising on the acquisition of subsidiary undertakings, representing the excess of the fair value of the consideration given over the fair value of the identifiable assets and liabilities acquired, is capitalised and written off on a straight line basis over its useful economic life, normally 20 years. Provision is made for any impairment. Directors Report and Consolidated Financial Statements Year ended 30 June 2004 Page 15

STATEMENT OF ACCOUNTING POLICIES For the year ended 30 June 2004 (continued) Financial fixed assets Financial fixed assets are shown at cost less provision for impairment. Taxation Current tax is provided on the group s taxable profits at amounts expected to be paid using the tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. Provision is made at the rates expected to apply when the timing differences reverse. Timing differences are differences between the group s taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in taxable profits in periods different from those in which they are recognised in the financial statements. Leased assets Tangible fixed assets acquired under finance leases are included in the balance sheet at their equivalent capital value and are depreciated over the shorter of the lease term and their useful lives. The corresponding liabilities are recorded as a creditor and the interest element of the finance lease rentals is charged to the profit and loss account on an annuity basis. Operating lease rentals are charged to the profit and loss account on a straight line basis over the lease term. Foreign currencies Transactions in foreign currencies are recorded at the rate ruling at the date of the transactions or at a contracted rate. The resulting monetary assets and liabilities are translated at the balance sheet rate or the contracted rate and the exchange differences are dealt with in the profit and loss account. Pensions Pension contributions to defined contribution schemes are charged to the profit and loss account in the period to which they relate. Page 16 Directors Report and Consolidated Financial Statements Year ended 30 June 2004

CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 30 June 2004 Notes 2004 2003 000 000 Group turnover - Continuing operations 1 70,748 52,436 - Acquisitions 3,111 - Cost of sales 73,859 52,436 (60,601) (41,803) Gross profit 13,258 10,633 Administrative expenses (9,715) (8,070) Distribution expenses (1,050) (925) Group operating profit - Continuing operations 2,477 1,638 - Acquisitions 16-2,493 1,638 Interest, net 4 71 83 Profit on ordinary activities before taxation 5 2,564 1,721 Tax on profit on ordinary activities 6 (384) (334) Profit for the financial year 7 2,180 1,387 Dividends paid and proposed 8 (368) (255) Retained profit for the financial year 1,812 1,132 Profit and loss account at beginning of year 11,418 10,286 Profit and loss account at end of year 13,230 11,418 Earnings per ordinary share 9 6.0 cent 3.8 cent Fully diluted earnings per ordinary share 9 5.9 cent 3.8 cent There are no recognised gains or losses other than the profit for the financial year. The accompanying notes form an integral part of this profit and loss account. On behalf of the board J. Hennessy A. Heraty Directors Report and Consolidated Financial Statements Year ended 30 June 2004 Page 17

CONSOLIDATED BALANCE SHEET at 30 June 2004 Notes 2004 2003 000 000 Fixed assets Goodwill 10 5,527 5,095 Tangible assets 11 970 907 6,497 6,002 Current assets Debtors 13 11,789 7,197 Cash at bank and in hand 6,689 6,809 18,478 14,006 Creditors: amounts falling due within one year 14 (9,153) (5,950) Net current assets 9,325 8,056 Total assets less current liabilities 15,822 14,058 Creditors: amounts falling due after more than one year 15 (559) (635) Net assets 15,263 13,423 Capital and reserves Called up share capital 16 3,677 3,649 Capital conversion reserve fund 57 57 Share premium 1,656 1,656 Merger reserve (3,357) (3,357) Profit and loss account 13,230 11,418 Shareholders' funds all equity 17 15,263 13,423 The accompanying notes form an integral part of this balance sheet. On behalf of the board J. Hennessy A. Heraty Page 18 Directors Report and Consolidated Financial Statements Year ended 30 June 2004

CONSOLIDATED CASH FLOW STATEMENT For the year ended 30 June 2004 Notes 2004 2003 000 000 Net cash inflow from operating activities 18 (a) 183 3,289 Returns on investments and servicing of finance 18 (b) 71 83 Taxation 18 (c) (396) (345) Capital expenditure and financial investment 18 (d) (204) (47) Acquisitions 18 (e) (433) (628) Equity dividends paid (293) (344) Net cash (outflow)/inflow before financing (1,072) 2,008 Financing 18 (f) 14 (766) (Decrease) / increase in cash (1,058) 1,242 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS For the year ended 30 June 2004 Notes 2004 2003 000 000 (Decrease) / increase in cash (1,058) 1,242 Cash outflow from decrease in debt and lease financing 14 795 Movement in net funds (1,044) 2,037 Net funds at beginning of year 6,373 4,336 Net funds at end of year 18 (g) 5,329 6,373 The accompanying notes form an integral part of this statement and reconciliation. On behalf of the board J. Hennessy A. Heraty Directors Report and Consolidated Financial Statements Year ended 30 June 2004 Page 19

COMPANY BALANCE SHEET at 30 June 2004 Notes 2004 2003 000 000 Fixed assets Financial assets 12 8,424 7,878 Current assets Debtors 13 650 2,544 Cash at bank and in hand 4,566 6,006 5,216 8,550 Creditors: amounts falling due within one year 14 (8,250) (11,066) Net current liabilities (3,034) (2,516) Net assets 5,390 5,362 Capital and reserves Called up share capital 16 3,677 3,649 Capital conversion reserve fund 57 57 Share premium 1,656 1,656 Profit and loss account - - Shareholders funds all equity 5,390 5,362 The accompanying notes form an integral part of this balance sheet. On behalf of the board J. Hennessy A. Heraty Page 20 Directors Report and Consolidated Financial Statements Year ended 30 June 2004

NOTES 1 Operations, acquisitions and turnover The group's subsidiary companies (note 12) are involved in the provision of employment services, as follows: Computer Placement Limited - recruitment and placement of permanent staff. Cpl Solutions Limited specialising in the placement of temporary and contract staff. Cpl Solutions Limited includes the Ann O Brien and Marlborough businesses. Careers Register Limited recruitment and placement of permanent and temporary financial staff. Multiflex Limited- recruitment and placement of permanent and temporary staff in the light industrial sector. Tech Skills Resources Limited - recruitment and placement of permanent and temporary staff in the engineering sector. Medical Recruitment Specialists Limited (formerly Medical Personnel Limited) - recruitment and placement of permanent and temporary healthcare staff. All turnover arises from the provision of these services in Ireland. During the year the group acquired all of the ordinary share capital of Medical Personnel Limited (renamed Medical Recruitment Specialists Limited) and the trade and assets of Thornshaw Limited, a company involved in recruitment of scientific personnel. The total consideration for these acquisitions, which includes amounts paid in cash and acquisition costs incurred, amounted to 604,000. Directors Report and Consolidated Financial Statements Year ended 30 June 2004 Page 21

NOTES (continued) 2 Directors remuneration Directors remuneration for the year was as follows: Salaries and other Total Total emoluments Bonus Fees Pension 2004 2003 000 000 000 000 000 000 Executive directors Anne Heraty 209 93-98 400 306 Paul Carroll 199 90-71 360 269 Garret Roche 114 20-5 139 123 Josephine Tierney 134 40-8 182 174 656 243-182 1,081 872 Non-executive directors John Hennessy - - 41-41 38 Patrick Garvey - - 27-27 25 Peter Malone - - - - - 2 - - 68-68 65 Total 656 243 68 182 1,149 937 Page 22 Directors Report and Consolidated Financial Statements Year ended 30 June 2004

NOTES (continued) 3 Staff numbers and costs The average number of persons employed by the group (including executive directors) during the year, analysed by category, was as follows: 2004 2003 Temporary staff 1,776 1,274 Recruitment consultants 115 94 Management and administration 40 38 1,931 1,406 The aggregate payroll costs of these persons were as follows: 2004 2003 000 000 Wages and salaries 38,697 30,101 Social welfare costs 4,110 3,135 Pension contributions 260 254 43,067 33,490 4 Interest, net 2004 2003 000 000 Interest receivable and similar income 83 106 Interest payable and similar charges: - On bank loans and overdrafts repayable within 5 years (1) (8) - On bank loans repayable after 5 years (11) (14) - Finance lease charges - (1) 71 83 Directors Report and Consolidated Financial Statements Year ended 30 June 2004 Page 23

NOTES (continued) 5 Statutory and other information Profit on ordinary activities before tax is stated after charging the following: 2004 2003 000 000 Auditors remuneration audit services 45 35 other services 16 26 Operating lease rentals, principally in respect of premises 499 360 Depreciation 242 293 Goodwill amortisation 325 310 6 Tax on profit on ordinary activities 2004 2003 000 000 Corporation tax at 12.5% (2003: 14.25%) 392 334 Overprovision in prior years (8) - Group current tax charge 384 334 Page 24 Directors Report and Consolidated Financial Statements Year ended 30 June 2004

NOTES (continued) 6 Tax on profit on ordinary activities (continued) The difference between the total current taxation shown above and the amount calculated by applying the standard rate of corporation tax to the profit before tax is as follows: 2004 2003 000 000 Profit on ordinary activities before tax 2,564 1,721 Tax on profit on ordinary activities at average standard corporation tax rate of 12.5% (2003:14.25%) 321 245 Effects of: Pension accrued and unpaid at year end 6 (12) Goodwill 40 44 Movement in general provisions 5 35 Excess depreciation over capital allowances 8 18 Other non-deductible items 12 4 Overprovision in prior years (8) - Group current tax charge per profit and loss account 384 334 There is no unprovided deferred tax at 30 June 2004 (2003 : Nil). 7 Profit for the financial year In accordance with Section 3 (2) of the Companies (Amendment) Act, 1986, a separate profit and loss account for the company is not presented in these financial statements. The profit for the year retained by the company was Nil (2003: Nil). Directors Report and Consolidated Financial Statements Year ended 30 June 2004 Page 25

NOTES (continued) 8 Dividends paid and proposed 2004 2003 000 000 Dividend paid of 0.4 cent (2003: 0.3 cent) per ordinary share 147 109 Dividend proposed of 0.6 cent (2003: 0.4 cent) per ordinary share 221 146 368 255 9 Earnings per ordinary share The computation of basic and fully diluted earnings per share is set out below: 2004 2003 000 000 Numerator for basic and fully diluted earnings per share Profit for the financial year 2,180 1,387 Denominator for basic earnings per share Weighted average number of shares in issue for the year 36,602,994 36,322,099 Effect of dilutive potential ordinary shares 445,859 554,795 Denominator for diluted earnings per share 37,048,853 36,876,894 2004 2003 Basic earnings per ordinary share 6.0 cent 3.8 cent Fully diluted earnings per ordinary share 5.9 cent 3.8 cent Page 26 Directors Report and Consolidated Financial Statements Year ended 30 June 2004

NOTES (continued) 10 Goodwill 000 Cost At beginning of year 5,908 Acquisitions in year (note 1) 957 Adjustment (i) (200) At end of year 6,665 Amortisation At beginning of year 813 Amortisation in year 325 At end of year 1,138 Net book value At 30 June 2004 5,527 At 30 June 2003 5,095 (i) During the year, goodwill was reduced to reflect the fact that certain potential earnout obligations previously provided for will not now become payable. Directors Report and Consolidated Financial Statements Year ended 30 June 2004 Page 27

NOTES (continued) 11 Tangible assets Fixtures Motor Buildings Equipment & fittings vehicles Total 000 000 000 000 000 Cost At beginning of year 552 997 334 138 2,021 Additions - 206 - - 206 Acquisitions - 149 - - 149 At end of year 552 1,352 334 138 2,376 Depreciation At beginning of year 53 751 180 130 1,114 Acquisitions - 50 - - 50 Charge for the year 14 193 30 5 242 At end of year 67 994 210 135 1,406 Net book value At 30 June 2004 485 358 124 3 970 At 30 June 2003 499 246 154 8 907 Depreciation relating to leased assets, comprising motor vehicles and equipment, amounted to 8,000 in the year ended 30 June 2004 (2003: 19,000). The net book value of leased assets at 30 June 2004 is Nil (2003: 8,000). The group had no capital commitments at 30 June 2004 (2003: Nil). Page 28 Directors Report and Consolidated Financial Statements Year ended 30 June 2004

NOTES (continued) 12 Financial fixed assets - company Investment in subsidiary undertakings 2004 000 Balance at start of year 7,878 Additions (note 1) 546 Balance at end of year 8,424 At 30 June 2004 the company had the following subsidiaries: Name Computer Placement Limited Cpl Solutions Limited Careers Register Limited Multiflex Limited Tech Skills Resources Limited Medical Recruitment Specialists Limited Principal activity Recruitment and placement of permanent staff Recruitment and placement of temporary and contract staff Recruitment and placement of permanent and temporary financial staff Recruitment and placement of permanent and temporary light industrial staff Recruitment and placement of permanent and temporary engineering staff Recruitment and placement of permanent and temporary healthcare staff All subsidiaries are wholly-owned and have their registered office at 83 Merrion Square, Dublin 2. In the opinion of the directors, the financial fixed assets are worth at least their carrying value. Directors Report and Consolidated Financial Statements Year ended 30 June 2004 Page 29

NOTES (continued) 13 Debtors: amounts due within one year Group Company 2004 2003 2004 2003 000 000 000 000 Trade debtors 9,750 6,238 - - Prepayments and other debtors 2,039 959 21 6 Amounts due from subsidiary undertakings - - 629 2,538 11,789 7,197 650 2,544 14 Creditors: amounts falling due in less than one year Group Company 2004 2003 2004 2003 000 000 000 000 Bank overdraft 938 - - - Bank loans (Note 15) 113 100-65 Finance lease obligations - 1 - - Trade creditors 1,795 1,228 - - Accruals 3,512 2,706 121 52 Deferred purchase consideration (Note 15) 114 264 - - Corporation tax 155 167 - VAT 885 459 - - PAYE/PRSI 1,420 879 - - Amounts due to subsidiary undertakings - - 7,908 10,803 Dividends payable 221 146 221 146 9,153 5,950 8,250 11,066 Page 30 Directors Report and Consolidated Financial Statements Year ended 30 June 2004

NOTES (continued) 15 Creditors: amounts falling due after more than one year Group 2004 2003 000 000 Bank loan (a) 309 335 Deferred purchase consideration (b) 250 300 559 635 (a) The group bank loan, which is secured on the group s Limerick premises, is repayable as follows: 2004 2003 000 000 - within one year 113 100 - between one and two years 16 16 - between two and five years 48 48 - after five years 245 271 - due after one year 309 335 Total 422 435 (b) Deferred purchase consideration relates principally to the acquisition of Tech Skills Resources Limited in the prior year. The deferred consideration payable is dependent on the performance of Tech Skills in the period 16 September 2003 to 15 September 2007. Directors Report and Consolidated Financial Statements Year ended 30 June 2004 Page 31

NOTES (continued) 16 Called up share capital 2004 2003 000 000 Authorised 50,000,000 ordinary shares at 0.10 each 5,000 5,000 Allotted, called up and fully paid 36,767,825 (2003: 36,488,825) ordinary shares at 0.10 each 3,677 3,649 During the year, 279,000 0.10 shares were issued at par as a result of the exercise of share options. Under the terms of a share option scheme established on 3 June 1999, at 30 June 2004 507,000 (30 June 2003: 801,000) options in respect of ordinary shares had been granted to employees of the group and remained outstanding. During the year, 279,000 options were exercised and 15,000 options lapsed. 279,000 of the outstanding options are exercisable at 0.10 per share at any time up to June 2006. The remaining 228,000 options are exercisable at 0.40 per share between October 2004 and October 2008. 17 Reconciliation of movement in shareholders funds 2004 2003 000 000 At beginning of year 13,423 12,262 Retained profit for the financial year 2,180 1,387 Shares issued 28 29 Dividends paid and proposed (368) (255) At end of year 15,263 13,423 18 Notes to the consolidated cash flow statement 2004 2003 000 000 (a) Reconciliation of operating profit to net cash flows from operating activities Operating profit 2,493 1,638 Depreciation of tangible assets 242 293 Profit on disposal of tangible assets - (6) Amortisation of goodwill 325 310 Increase in debtors (3,442) (552) Increase in creditors 565 1,606 Net cash inflow from operating activities 183 3,289 Page 32 Directors Report and Consolidated Financial Statements Year ended 30 June 2004