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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