A GREAT INVESTMENT?

Reed Executive announced future strategy alongside annual results

Reed Executive PLC, the recruitment specialist, released its annual financial results for 1999 today (Monday 17 April 2000) in advance of the 40th anniversary of the company on 7 May 2000. Alongside the results, Reed Executive announced its plans to maximise its potential for the future.

Reed Executive’s turnover for the year increased by approximately 20 per cent to £293,000,000 during 1999. Profits before tax for the year increased by 25 per cent to £20,153,000, whilst profits after tax for the year grew by 28 per cent to £13,950,000.

Earnings per share rose to 30.7p from 23.1p, an increase of 33 per cent, and 5 points (almost 20 per cent) greater than the profit growth after tax due to share buybacks during the year, in which we invested £2 million. The board has therefore declared a final dividend of 2.5p.

Reed Executive’s balance sheet was strengthened further during the year, with cash reserves standing at £22 million, up from £13 million at the beginning of the year, and this after having invested £2 million in purchasing our own shares.

Nearly 2,000 Reed Executive staff, known as Co-members, will be recognising the Company’s 40th birthday on 7th May 2000 , with twenty-nine of those years having been as a public company. From an initial investment of £75 when Alec Reed started the company, and a valuation on flotation of £1.5 million, the company is capitalised today at approximately £114 million, having returned £15 million capital to shareholders on the sale of Medicare in 1986. All of the growth has been organic, with the company anticipating greater growth in the future. Reed Executive PLC also announced today that:

Founder and Chairman Alec Reed becomes Non-Executive Chairman.

James Reed remains Chief Executive, having held this post for three years during which time the company has experienced its greatest growth ever.

James Reed announced his strategy for the future:

Reed has adopted a ‘Starburst’ strategy, re-organising the group into smaller, more customer focused and more commercially agile business units over the last six months. Reed Executive PLC has been re-organised into the five subsidiary companies listed below, pursuing opportunities that exist offline, online and through outsourcing:

Reed Personnel Services PLC, focusing on specialist recruitment services;

Reed Solutions PLC, delivering bespoke and general staffing solutions;

Reed in Partnership PLC, providing outsourced services to the public and private sectors;

Reed Learning PLC, supplying learning, training and education services to the public and private sectors;

Reed Connections Ltd, delivering information technology solutions and financial and accounting services to both internal and external customers.

The Starburst strategy goes further, to include the planned demerger of Reed’s healthcare recruitment business in response to the substantial opportunities in the healthcare sector both in the UK and internationally.

A £10 million investment is announced to develop and promote the unique ‘bricks and clicks’ strategic position enjoyed by Reed’s internet site reed.co.uk. Initially set up five years ago, the site has already become a leading recruitment hub, and last month handled over 600,000 individual job searches. As classified advertising online is an unlimited commodity, Reed gives it away – companies can now advertise their vacancies on Reed’s site for free through the Freecruitment service. Reed’s site therefore offers the ‘best of both worlds’, maximising the internet’s advantages as the initial channel of choice for job-seekers whilst also offering the back-up of the services of 260 branches and 1,600 consultants throughout the UK and Ireland.

An initial investment of £10 million is announced in tempjobs.com, Reed’s new online temporary recruitment business. Reed was the first company in Europe to deliver temporary work online, and is developing the service, aimed at ‘changing the way that Europe works’, prior to a further launch this summer.

James Reed, Chief Executive of Reed Executive PLC, comments:

"Our Starburst strategy means that Reed Executive now looks more like a venture capitalist company than a traditional business. This is deliberate, although at Reed we have re-named this strategy ‘Venture Peoplist.’"

"Reed Executive’s planned £20 million investment in tempjobs.com and reed.co.uk focuses entirely on ways that new technology can empower people, first and foremost. Our philosophy has always been that people make the difference, and our future investment and growth strategy will continue to reflect this. While this level of investment will have a negative impact on profits in the short term, we think this is a price worth paying and a sound investment."