A provider of 
staffing services 
to the Health, 
Social Care and
Education sectors
Annual Report and Financial Statements 2002
Reed Health Group plc Financial Highlights 1
The Reed Health Group plc – at a glance 2
Chairman’s Statement 4
Chief Executive’s Review 6
Financial Review 12
Board of Directors and Advisors 14
Report of the Directors 16
Remuneration Report 18
Corporate Governance 20
Independent Auditors’ Report to the 
Shareholders of Reed Health Group plc 22
Consolidated Profit and Loss Account 23
Consolidated Balance Sheet 24
Company Balance Sheet 25
Consolidated Cash Flow Statement 26
Notes to the Financial Statements 27
Notice of Annual General Meeting 41
Form of Proxy
Contents 1 Reed Health Group plc
• Strong growth in proﬁts, operating margins and cashﬂow
• Increase in gross proﬁt margin as a result of concentrating on
higher quality contracted business
• Acquisition of The Locum Group on 28 May 2002 for £33.7m
• Maiden ﬁnal dividend of 1.34p per share
• Cashﬂow from operations up signiﬁcantly to £7.2m (2001: £1.9m) 
Financial Highlights
2001 2002
Turnover
£m
66.8
78.3
2001 2002
Operating Proﬁt*
£m
4.4
5.2
2001 2002
Diluted Earnings
per Share* (p)
6.69
7.84
2001 2002
Shareholders’ Funds
£m
7.5
31.5
2002 2001 Increase
Turnover 78.3m 66.8m 17.3%
Gross proﬁt 15.2m 11.3m 34.6%
Operating proﬁt* 5.2m 4.4m 18.2%
Proﬁt before taxation* 5.2m 4.3m 20.9%
Diluted earnings per share* 7.84p 6.69p 17.2%
Dividend – ﬁnal 1.34p ––
– total 2.00p ––
* Stated before goodwill amortisation and exceptional costs. 2 Reed Health Group plc
The Reed Health Group plc 
– at a glance
The Company provides Human Resource solutions to the Health and Social Care
sectors through recruitment, consultancy and management services. Operating out of
over 20 branches across the UK, and with substantial international contacts, we are
able to respond to the differing needs of our clients.
Nursing
Professions
Allied to
Medicine
Doctors
Social Care
Education 
Professions Allied to Medicine: A leading supplier in the market, this
division covers over 12 professions allied to medicine. The business operates
out of 5 branches and services NHS and private clients across England,
Scotland and Wales. The database consists of over 20,000 candidates.
Nursing: Deals with qualiﬁed and unqualiﬁed nursing staff, this division is
focused on supplying NHS clients in the South East of England and the
Midlands. Most of this business is held under contract and it operates from
7 branches. The database holds approximately 10,000 nursing candidates.
Doctors: Supplies locum staff to hospitals operating from 5 branches 
and covering all of the UK. This division has been part of the “national
contract” agreement since 1997. It holds over 6,000 medically qualiﬁed
candidates on its database.
Social Care: Amongst the most successful competitors in its ﬁeld, this
division supplies qualiﬁed and unqualiﬁed social workers across the social
services, operates from 11 branches throughout England and Wales and
holds a database of 15,000 candidates.
Education: Supplies temporary and permanent teaching staff into 
primary and secondary schools, this division operates from 5 branches and
has a database of 3,500 qualiﬁed teachers. Service extends to schools in 
the South East, the Midlands and the North of England. 3 Reed Health Group plc
Reed Health Group: Specialists in human resource
solutions to Health and Social Care and Education
markets. We believe in:
Dedication to quality, professionalism and service
Delivering value to our customers and shareholders
Developing our staff
We aim to shape and lead our ﬁeld by being the
partner of ﬁrst choice.
Professions Allied
to Medicine
Auckland (New Zealand)
Birmingham
Dublin
Forfar
London
Manchester
Melbourne (Australia)
Nursing
Birmingham
London
Doctors
Birmingham
Glasgow
London
Leeds
West Malling
Social Care
Birmingham
Bristol
Cardiff
Leeds
Liverpool
London
Manchester
Newcastle
Shefﬁeld
Education
Auckland (New Zealand)
Calgary (Canada)
Leeds
London
Melbourne (Australia)
Ware
New Zealand Canada Australia 4 Reed Health Group plc
I am delighted to report on the results of Reed
Health Group plc for the year to 30 June 2002.
During this period the Group demerged from 
Reed Executive plc in July last year, acquired 
The Locum Group Limited (“The Locum Group”)
in May this year, and has established itself as a
leading professional and specialist HR support
services company delivering services to Health,
Social Services and Education.
Financial Results 
In the year ended 30 June 2002, Reed Health Group’s
turnover increased by 17.3% to £78.3m 
(2001: £66.8m), gross proﬁt increased by 34.6% to
£15.2m (2001: £11.3m) and operating proﬁt before
taxation, goodwill amortisation and exceptional item,
increased 18.2% to £5.2m (2001: £4.4m). Diluted
earnings per share, adjusted for goodwill amortisation
and exceptional item, were up 17.2% to 7.84p 
(2001: 6.69p). Shareholders’ funds at 30 June 2002
have increased to £31.5m from £7.5m the prior year.
Net cash inﬂow from operating activities for the year
to 30 June 2002 was £7.2m (2001: £1.9m). As at 
30 June 2002, the Group had net debt of £6.9m.
The Directors are recommending a maiden ﬁnal
dividend of 1.34p per share bringing the total
dividend per share for the ﬁnancial year to 2.0p. 
The Group
The Company completed the acquisition of The
Locum Group on 28 May 2002.
In the Health market the Group is now one of the
leading providers of professional stafﬁng services
and has the capability to offer doctors, nurses, and
other professionally qualiﬁed health staff, such as
physiotherapists, optometrists, pharmacists and
radiographers. In the Social Care market, The
Locum Group has strengthened Reed Health
Group’s presence in the South East of England.
The division is ﬁrmly established as a leading
provider of services to both the local authority and
independent sectors. The acquisition has enabled
the Group to enter the Education market, a sector in
Chairman’s Statement 5 Reed Health Group plc
which we plan to continue to grow. The Board
expects The Locum Group to make a valuable
contribution to Reed Health Group’s proﬁts in the
coming year.
The integration of The Locum Group is progressing
to plan. Opportunities are being pursued to share
candidate bases across the enlarged Group and to
increase the number of candidates sourced from
overseas locations particularly Australia and Canada.
Additionally, we are evaluating plans to fully integrate
its support functions and enhance its management
information systems to provide a ﬁrm base from
which other acquisitions can be supported. 
Our people
On behalf of the Board, I would like to thank all our
employees for their hard work and dedication in this
our ﬁrst year as a public company. 
Summary and outlook
Our markets remain full of opportunities. The
Government’s continued commitment to improving
the public services of Health, Social Care and
Education together with the ever increasing demand
for ﬂexible, professional and specialist stafﬁng
resources make for a thriving and competitive market.
The Board believes the Group is well placed to take
advantage of the many prospects and opportunities
that present themselves in our current market. 
By actively developing value added, integrated
services for our clients across each of our three
markets, the Group will grow organically, whilst
looking at complementary acquisition opportunities.
The Board believes the Group is well placed to
maintain the momentum established over the 
past 12 months and views the year ahead with
conﬁdence.
Lord Tom Sawyer
Chairman
9 September 2002
“The Board believes the Group is well placed to take
advantage of the many prospects and opportunities that
present themselves in our current market.” 6 Reed Health Group plc
Chief Executive’s Review
This has been a year of signiﬁcant development for
the Company. In July 2001 we demerged from
Reed Executive plc and in May this year we made
our ﬁrst major acquisition, The Locum Group. 
The principal reason for the demerger was to 
allow the Company to concentrate on the
healthcare and public sector stafﬁng markets and
to make suitable acquisitions. Both these aspects
are essential for the Company to build on its aim of
becoming the partner of choice for the delivery of
professional and specialist human resource 
(“HR”) solutions, in the areas of Health, Social Care
and Education.
Group Strategy
Our strategy is to become the leading provider of
professional and specialist HR recruitment and
retention solutions to the public and private sectors
in the UK, focusing on the Health, Social Care and
Education markets.
There are signiﬁcant opportunities in each of these
markets, based on services that add value, are
quality driven and have a strong customer
satisfaction focus. In order to take advantage of
these opportunities, we will continue to build on our
professional capabilities and understanding of
these markets by both increasing our specialisation
and cross selling our services across our client
base. The acquisition of The Locum Group has
opened up a number of exciting synergies,
particularly in the area of Health.
It is our intention to create integrated services
across our sectors to provide a complete solutions
package for the recruitment and retention of
specialist staff by our clients.
Sector Review
Health 
Following the acquisition of The Locum Group we
are now deploying doctors and health professionals
on a nationwide basis into hospitals, clinics and GP
surgeries. Combined with our nursing business,
which chieﬂy concentrates on the market in the
South East of England, we now cover the majority
of medically qualiﬁed professional disciplines. 
Over the past 12 months we have widened our
professional Health stafﬁng portfolio further by
starting up specialist services such as Optometry
and Pharmacy. These niche developments and the
ongoing specialisation are in line with our overall
strategy of developing value added, integrated
services. This strategy, which has been
strengthened by the acquisition of The Locum
Group, will put us in an increasingly strong position
in the markets in which we operate.
Professions Allied to Medicine 
Turnover for the year to 30 June 2002 increased by
56.0% to £16.7m from £10.7m in 2001. Excluding
the £2.4m of turnover relating to The Locum Group,
growth was 33.3% within the existing Reed Health
Group Health Professionals division.  7 Reed Health Group plc
“Our strategy is to become the leading provider of
professional and specialist HR recruitment and
retention solutions to the public and private sectors 
in the UK, focusing on the the Health, Social Care 
and Education markets”.
Working in partnership
Using the expertise of Reed
Nursing, Ashford and St Peters
NHS Trust will generate
savings of up to £600,000
over the next two years, to be
reinvested in NHS Services.
The initiative which assessed
the use of the Trust’s nurse
bank and looked at how it
could be centralised, will
beneﬁt staff, patients and the
Trust, illustrating how private
sector experience, knowledge
and skills can be used for
public beneﬁt. 8 Reed Health Group plc
This growth has been mainly in the service sectors
of therapeutic professions and we have continued
our successful strategy of adding services and
professions to our portfolio. T ogether with The
Locum Group’s relevant divisions, this business
now operates from 5 branches, providing
nationwide coverage, and caters for over a dozen
specialist professions, such as optometrists and
chiropodists.
Nursing 
Turnover for the year to 30 June 2002 fell marginally
by 1.7% from £29.9m to £29.3m reﬂecting the agreed
termination of the Forest Healthcare NHS Trust
contract, in February 2002, which had previously
generated turnover of approximately £6m per annum.
We have successfully tendered for new business.
In February 2002 we were awarded a Service Level
Agreement with Surrey and Sussex Healthcare NHS
Trust and in July we were appointed sole supplier
to the newly formed Central and Northwest London
Mental Health NHS Trust. We have also extended
existing contracts with Hammersmith Hospitals
NHS Trust to 2007 and Parkside and Newham to
October 2002 and March 2003 respectively. 
Work held under contract now accounts for
approximately 70% of turnover in this division, down
from approximately 80% last year. This change to a
higher proportion of spot placements has enabled
us to improve gross margins so the impact on gross
proﬁt of losing a high volume, low margin contract
within the Nursing division is minimised. At the same
time we have restructured the division, amalgamating
ten branches into seven, to provide fewer, larger
branches thus lowering the division’s cost base.
Having been awarded supplier status under the
ﬁrst phase of the London Agency Project (“LAP”) 
in September 2001, the second phase (“LAP 2”) is
likely to come into effect in the Spring of 2003. 
Chief Executive’s Review continued 9 Reed Health Group plc
LAP 2 will regulate the pay and charge rates of
commercial agencies in respect of all nursing staff
supplied to the majority of London NHS Trusts. 
With NHS Professionals, the NHS is trying to solve
its own stafﬁng needs, however, it is difﬁcult to see
how one kind of provision will remedy the shortfall of
qualiﬁed and skilled workforce that currently exists
and seems only set to grow worse. A degree of
impact has been felt by the Company due to the
confusion over NHS Professionals, however, there
continue to be opportunities for quality nursing
agencies, particularly in London and the South East.
Doctors 
The doctors division, which was acquired as part of
The Locum Group, generated turnover of £1.3m in
the period of ownership. The Locum Group has built
a strong reputation for the supply of medical locum
staff to NHS Trusts in England, Wales and Scotland
and operates out of 5 branches from a database of
over 6,000 candidates.  
Since the formation of the “national contract” for
the supply of locum doctors in 1997, The Locum
Group has been one of only nine agencies
accredited on this contract. This “national contract”
is presently being renegotiated for a further ﬁve
year extension and the result of this is expected in
October. Over 150 NHS Trusts are currently part of
the “national contract” and we service over half of
these Trusts, and have preferred supplier status
with over 20. In particular, we were pleased to
renew a contract with Guy’s and St Thomas’ private
patients unit for residential medical ofﬁcers, 
Market statistics
• Government committed to increase signiﬁcantly the number of
consultants, GP’s, nurses, midwives, health visitors, therapists and
scientists by 2008
• The Wanless Report indicates the healthcare workforce may have
to increase by 300,000 over the next two years
• In Health, Government spending plan will increase to £105bn by
2007/8
• Social Services and Education expected to receive equally strong
commitments
• PPP expected to play an increasing role in the health industry 10 Reed Health Group plc
Chief Executive’s Review continued
which has been extended to May 2003 with yearly
extensions thereafter.
Consultancy 
We have had the opportunity to work on a number
of consultancy projects with NHS Trust clients. 
This has opened up new opportunities for working
in partnership with our clients and to achieve better
services for the end user. We believe that the
opportunity to undertake consultancy assignments
conﬁrms our standing in the market as being a
quality provider of services.
Social Care
The division supplies qualiﬁed and unqualiﬁed
social workers on a temporary and contract basis,
mainly to Local Authorities and Social Services,
across specialist services ranging from child care
to elderly care.
Turnover for the year to 30 June 2002 increased
from £26.2m to £30.3m, an increase of 15.5%.
Excluding turnover of £0.4m relating to The Locum
Group acquisition, growth was 14.0%. This was a
pleasing result, particularly in the light of a 
rigorous internal re-structuring programme which
took place during the second half of the year. 
This has led to improved business processes,
margins and cost control. Poorly performing
projects and supply agreements have been
terminated or re-negotiated and we have put in
place the necessary operational infrastructure to
enable improved performance.
A number of supply contracts were renewed in 
the year, namely Greenwich City Council, 
Islington Social Services, Waltham Forest Social
Services and Birmingham, Bury and Leeds 
Social Services.  
The integration of The Locum Group’s social care
business into the Reed Health Group’s social care
business is progressing well and should be
completed before the end of the calendar year. 
In particular, this integration will strengthen our
market standing in the London region. We have
increased the number of our branches there from
two to three and more branch openings are
scheduled over the coming months.
Education
This is a new market for Reed Health Group. The
business was acquired through The Locum Group
acquisition and in the period to 30 June 2002
generated sales of £0.7m. This is a market that ﬁts
the overall strategy of the Group. There are growing
synergies particularly between the markets of
Social Care and Education, which we are now able
to satisfy. This will bring us further cross selling
opportunities across the markets. This division
operates from ﬁve branches and concentrates on
the supply of temporary and permanent teachers to
primary and secondary schools. Overseas supply
of candidates has become successful in this
division and is expected to continue to generate
growth in this business.
International
Our ability to grow the business relies on our ability to
recruit and retain suitably qualiﬁed and experienced
professional staff. Our recruitment ofﬁces in
Australia and New Zealand, which were acquired
as part of The Locum Group, play an important part
in attracting suitable staff to work in the each of the
Health, Social Care and Education sectors. 
We are currently establishing a Canadian ofﬁce to
formalise our recruitment presence there. Initially, 11 Reed Health Group plc
this ofﬁce will be used to supply Canadian teachers
to the UK market, but over time it will be expanded to
cater for the Health and Social Care markets. We
expect the ofﬁce to be operational in October 2002. 
Criminal Records Bureau
Whilst the well publicised difﬁculties at the Criminal
Records Bureau have not affected us to date, the
Group operates in areas where many of our
candidates need to be vetted. If the problems at
the Criminal Records Bureau continue, this may
have a slight impact on our business. However, at
this stage, the Board foresees no immediate
impact on the Group.
Summary and Outlook
Our ﬁrst acquisition has materially strengthened our
aim of becoming a preferred and leading supplier
of professional and specialist personnel in the
Health, Social Care and Education sectors.
As we continue to improve our internal structures to
increase effectiveness and efﬁciency, we will continue
to improve our offers of value adding quality services
to customers to build on our position in the forefront
of recruitment and retention in our chosen markets.
We will drive the business based on our organic
growth skills, combined with making ﬁtting and suitable
acquisitions. The year ahead is full of opportunities
to strengthen our position and move towards
realising our aim.
Christa Echtle
Chief Executive
9 September 2002 12 Reed Health Group plc
Financial Review
General
The demerger of Reed Health Group plc from 
Reed Executive plc on 4 July 2001 has been
accounted for under the principles of merger
accounting as set out in FRS 6 “Acquisitions and
Mergers”. This means that proforma ﬁgures have
been presented for the Group as if the trading of
the demerged businesses had been conducted by
Reed Health Group plc for all periods shown.
Turnover
T urnover for the Group increased by 17.3% to £78.3m
from £66.8m. Growth in turnover, excluding £4.8m
attributable to The Locum Group since its acquisition
on 28 May 2002, was 10.1%.
Gross proﬁt 
Gross proﬁt increased by 34.6% to £15.2m 
(2001: £11.3m) and gross margin as a percentage
of sales increased to 19.4% from 16.9%. Excluding
the acquisition of The Locum Group, the increase
in gross proﬁt was 25.6% and gross margin as a
percentage of sales was 19.3%.
Operating proﬁt and margin
Administrative expenses before goodwill amortisation
and exceptional costs increased by 45% to £10.0m
(2001: £6.9m). Of the £3.1m increase, £0.7m is
attributable to the acquisition of The Locum Group,
the remainder represents a necessary build in the
Company’s infrastructure following its demerger
from Reed Executive plc.
The Group’s operating proﬁt before goodwill
amortisation and exceptional item increased by
18.2% to £5,179,000 (2001: £4,383,000), representing
a net operating margin of 6.6%. Excluding the
acquisition of The Locum Group, operating proﬁt
before goodwill amortisation and exceptional item
was £4,849,000, 10.6% ahead of last year.
Exceptional charge
The exceptional item of £156,000 arises from costs
incurred relating to the demerger of the Group 
from Reed Executive plc. No tax relief has been
taken for these costs.
Pre-tax proﬁt
Proﬁt before tax, goodwill amortisation and exceptional
item amounted to £5,227,000 up 20.5% on last year’s
£4,338,000. Proﬁt attributable to the acquisition of 
The Locum Group from 28 May 2002 was £330,000
before goodwill amortisation of £132,000 and
interest on additional borrowings of £44,000.
Taxation
The tax charge for the year was £1,588,000 giving
an effective rate of 32.2%. The effective tax rate on
proﬁts, before goodwill amortisation and exceptional
item, was 30.4%
Earnings per share
Adjusted earnings per share, before exceptional
item and goodwill amortisation, were 7.89p 
(2001: 6.69p) an increase of 17.9%. This reﬂects
the increase in pre-tax proﬁts coupled with a
modest amount of interest income. Adjusted
earnings per share, on a fully diluted basis but 
before exceptional item and goodwill amortisation
were 7.84p (2001: 6.69p), an increase of 17.2%.
Dividend
The Board has proposed a ﬁnal dividend of 1.34p
per share, which together with the interim dividend
of 0.66p, brings the total dividend for the year to
2.0p. This represents a yield of 1.4% on the 30
June 2002 share price of 146.5p and a dividend
cover of 3.1 times. The dividend is payable on 
2 December 2002 to shareholders on the register
as at 1 November 2002. Cashﬂow
Cashﬂow from operations amounted to £7.2m
(2001: £1.9m). This increase was achieved through
a combination of increased proﬁtability and better
working capital management. The increase in
creditors payable is distorted by certain one-time
amounts totalling £0.8m due to Reed Executive plc,
which were settled subsequent to the year end.
Capital expenditure for the year amounted to
£476,000 and consisted of investment in computer
systems hardware and software to support the
business. Dividends, interest, and corporation tax
amounted to a net payment of £1,173,000.
Acquisitions
On 28 May 2002 the Company purchased The Locum
Group on a debt free basis for £33.7m, net of
expenses of £0.8m.  
T o satisfy the consideration payable, the Company
raised £21.8m, net of share issue expenses of
£0.6m, from the issue of 14.9m new Ordinary Shares,
drew down new bank facilities of £8.0m and utilised
£4.7m of existing cash balances.
Equity shareholders’ funds
Equity shareholders’ funds increased from £7.5m 
in 2001 to £31.5m in 2002 reﬂecting net proceeds
from the share issue in the year of £21.8m and
retained earnings of £2.2m after dividends of £1.1m.
Treasury 
Net debt at the end of the year was £6,861,000
giving a modest gearing of 21.8%. 
Derivatives and other ﬁnancial instruments
The Group’s ﬁnancial instruments comprise
borrowings, cash and various items such as trade
debtors and creditors that arise directly from its
operations. The main purpose of these instruments
is to raise ﬁnance for operations. The Group has not
entered into derivatives transactions nor does it
trade in ﬁnancial instruments as a matter of policy.
The main risks arising from the Group’s ﬁnancial
instruments are interest rate risk and liquidity risk.
The Board’s policy on each is described below and
has not changed since incorporation.
Operations are ﬁnanced through a mixture of
retained proﬁts and bank borrowings. The Board’s
policy is to use variable rate borrowings. T o ensure
continuity of debt funding the Group’s policy is 
to keep part of the debt due in more than one 
year’s time. 
The Group is geared to enable the possibility of
further ﬁnancing through debt. Interest rates remain
unchanged and possible short term variations in the
rates should not signiﬁcantly impact the cost of debt
to the Group.
The Group’s exposure to foreign currency risk remains
low due to the relative size of the overseas operations.
Desmond Doyle
Group Finance Director
9 September 2002
13 Reed Health Group plc
Diluted adjusted earnings per share up 17.2% to 7.84p
per share from 6.69p per share
*Stated before goodwill amortisation and exceptional costs.
Financial summary
‘01 ‘02 ‘01 ‘02 ‘01 ‘02 ‘01 ‘02 ‘01 ‘02
Turnover
£m
66.8
78.3
Gross
Proﬁt
£m
11.3
15.2
Operating
Proﬁt*
£m
4.4
5.2
Diluted
Earnings per
Share* (p)
6.69
7.84
Shareholders’
Funds
£m
7.5
31.5 14 Reed Health Group plc
Board of Directors
Directors and Advisors
Lord Tom Sawyer Christa Echtle
Desmond Doyle Alan Dexter
Daphne Statham James Reed
Directors
Lord T om Sawyer – Non-Executive Chairman
•
*
Christa Echtle – Chief Executive
Desmond Doyle – Group Financial Director
Alan Dexter – Non-Executive Director
•
*
†
James Reed – Non-Executive Director
•
*
Daphne Statham – Non-Executive Director
•
*
•
Member of the Audit Committee
* Member of the Remuneration Committee
† Senior independent Non-Executive Director
Secretary
Peter Chapman
Registered ofﬁce
7-9 St Georges Square
London SW1V 2HX
Registered number
04215546
Stockbroker
Robert W. Baird Ltd
Mint House
77 Mansell Street
London E1 8AF 15 Reed Health Group plc
Lord Tom Sawyer (59)
Non-Executive Chairman
T om was appointed to the Board in July 2001.
Previously he was the General Secretary of the
Labour Party from 1994 to 1999 following on from
his post as deputy General Secretary of Unison.
T om is also currently a Non-Executive Director of The
Britannia Building Society and Investors in People UK.
Christa Echtle MA, MBA (44)
Chief Executive
Christa joined Reed Personnel Services in the
Social Care division becoming Divisional Manager
in 1991. In 1998 she became Operations Director
for the Healthcare division and in 2001, led the
demerger of the Group from Reed Executive plc.
Desmond Doyle BA, ACA (37)
Group Finance Director
Desmond was appointed to the Board on joining
the Company in November 2001. Previously he
was European CFO for NYSE listed APW, prior to
which he held positions as a Divisional Finance
Director and Group Financial Controller with VERO
Group plc. Desmond qualiﬁed as a chartered
accountant with Coopers & Lybrand in 1990.
Alan Dexter FCA (60)
Non-Executive Director
Alan was appointed to the Board in July 2001. 
He was previously Chief Executive then Chairman
of Community Hospitals Group plc and a past
Director and Chairman of the Independent
Healthcare Association. He is currently a Non-
Executive Director of Capio Healthcare UK Limited
(formerly Community Hospitals Group plc), Non-
Executive Chairman of Medeval Group Limited and
a Director of Trinity College of Music, London.
James Reed MA, MBA (39)
Non-Executive Director
James was appointed to the Board in July 2001.
He is currently the Chief Executive of Reed
Executive plc. He had previously worked as Group
Chief Operating Ofﬁcer and Operations Director of
Reed Employment. 
Daphne Statham CBE, MA (63)
Non-Executive Director
Daphne was appointed to the Board in April 2002.
Daphne is currently the Director of the National
Institute for Social Work and a past President of the
National Association of Councils of Voluntary Service.
Auditors
RSM Robson Rhodes
186 City Road
London EC1V 2NU
Solicitors
Slaughter and May
One Bunhill Row
London EC1Y 8YY
Registrars
Capita IRG Plc
Bourne House
34 Beckenham Road
Beckenham
Kent BR3 4TU
Bankers
Barclays Bank PLC
54 Lombard Street
London EC3P 3AH 16 Reed Health Group plc
The Directors present their report and the audited ﬁnancial
statements for the period from incorporation on 11 May 2001
to 30 June 2002. As stated in note 1b to the ﬁnancial
statements, the Group has applied merger accounting for the
demerger from Reed Executive plc.
Principal activities
The principal activities of the Group are the provision of
stafﬁng services to the Health, Social Care and Education
sectors. The Chairman’s Statement, Chief Executive’s and
Financial Reviews on pages 4 to 13 provide a report on the
Group’s activities, trading results and future developments. 
Results and dividends
The proﬁt attributable to shareholders was £3,351,000 
(2001: £2,994,000). An interim dividend of 0.66p per share
was paid to shareholders on 31 March 2002. The Directors now
recommend a ﬁnal dividend of 1.34p per share, to be paid to
shareholders on 2 December 2002. Following payment of all
dividends for the year, totalling 2.0p per share, £2,257,000 will
be transferred to reserves. 
Directors
The Directors who served during the year are as follows:
Christa Echtle and Malcolm Paget were each appointed 
as Directors on 8 June 2001. Malcolm Paget resigned on 
20 November 2001. 
Lord T om Sawyer, Alan Dexter and James Reed were each
appointed to the Board on 5 July 2001. Desmond Doyle was
appointed to the Board on 26 November 2001, and Daphne
Statham was appointed to the Board on 1 April 2002. 
Having been appointed as Directors during this ﬁrst period, all
Directors are required to retire by rotation, and if eligible, offer
themselves for re-election at the Annual General Meeting.
Brief biographical details of the present Directors are set out
on pages 14 and 15.
Directors’ interests
All Directors’ interests, including details of shareholdings, are
set out in the Remuneration Committee Report to the Board
on pages 18 and 19.
Substantial shareholdings
As at 6 September 2002 the Company has been notiﬁed of the
following material interests (excluding Directors’ interests
which are shown on page 19) of 3% or more of its ordinary
share capital: 
Notes:
(i) A. Reed has a non-beneﬁcial interest which includes 2,941,000 Ordinary Shares
held as co-trustee of the Reed Charity and 5,000,000 “B” Ordinary Shares held as
co-trustee of a family trust.
(ii) R. Reed’s interest includes an interest in 1,164,621 Ordinary Shares as a result of his
life interest in a family trust and 34,875 Ordinary Shares representing his own
holding. R. Reed also has a non-beneﬁcial interest in 2,941,000 Ordinary Shares
which he holds as co-trustee of the Reed Charity and in 7,344,557 “B” Ordinary
Shares held as co-trustee for family trusts (except to the extent that he has a life
interest in those trusts).
(iii) A. Chapman’s interest includes an interest in 1,164,621 Ordinary Shares as a
result of her life interest in a family trust and 25,000 Ordinary Shares representing
her own holding. A. Chapman’s interest includes an interest in 5,000,000 “B”
Ordinary Shares by virtue of related interest in a family trust and an interest in
4,024,388 “B” Ordinary Shares representing her life interest in a family trust. 
She also has a non-beneﬁcial interest in 2,941,000 Ordinary Shares held as a co-
trustee of the Reed Charity and 7,344,558 “B” Ordinary Shares held as co-trustee
of family trusts (except to the extent that she has a life-interest in those trusts).
(iv) The interests of James Capel Nominees Ltd include 4,024,388 “B” Ordinary Shares
beneﬁcially owned by A. Chapman and 4,024,387 “B” Ordinary Shares beneﬁcially
owned by R. Reed. The Ordinary Shares registered in the name of James Capel
Nominees Ltd are split as to 199,000 owned by the Reed Charity and 108,290
owned by independent third parties.
(v) The interests of Farrer Trust Corporation Ltd of 4,603,500 “B” Ordinary Shares
comprise 2,274,258, 1,164,621 and 1,164,621 Ordinary Shares beneﬁcially owned
by J. Reed, A. Chapman and R. Reed respectively. The “B” Ordinary Shares
registered in the name of Farrer Trust Corporation Ltd are beneﬁcially owned 
by J. Reed.
(vi) J.L. Hill’s (of Farrer & Co.) interest is held as co-trustee of a Reed family trust.
(vii) The interest of Schroders Investment Management Limited includes 250,000
Ordinary Shares held by Schroders Investment Management North America Inc,
an afﬁliated company of Schroders Investment Management Limited.
(viii) The Interest of Eagle Trustees Ltd represents the holding of the Reed Executive 
Employee Beneﬁt Trust.
Annual General Meeting – special business
The Annual General Meeting of the Company will take place 
at Mint House, 77 Mansell Street, London E1 8AF on 
26 November 2002 at 12.30. The Notice of Annual General
Meeting may be found on pages 41 and 42. 
Donations
No political or charitable donations were made during the year
(2001: £nil). 
Report of the Directors
Ordinary “B” Ordinary Total
Shares percentage Shares percentage percentage
A. Reed 750,000 2.0 5,885,055 26.5 11.1
Reed Charity 2,941,000 7.9 nil nil 4.9
R. Reed 1,199,496 3.2 4,026,387 18.1 8.8
A. Chapman 1,189,621 3.2 9,024,388 40.6 17.1
James Capel Nominees 307,290 0.8 8,048,775 36.2 14.0
Farrer Trust Corporation 4,603,500 12.3 3,320,170 14.9 13.3
J.L. Hill nil nil 5,000,000 22.5 8.4
Eagle Trustees 1,964,577 5.3 nil nil 3.3
Schroders Investment
Management 7,275,283 19.5 nil nil 12.2 17 Reed Health Group plc
Employees
The Group attaches considerable importance to ensuring all its
employees are provided with information concerning them as
employees, particularly the economic and ﬁnancial factors
affecting the Group’s performance and the market in which the
Group operates. Internal newsletters are issued on a monthly
basis and consultation between management and staff is
encouraged through monthly meetings of the staff Link Group.
Employees are consulted on issues directly affecting them
wherever possible. 
Equal opportunities
The Group is committed to an active Equal Opportunities
Policy from recruitment and selection, through training and
development, appraisal and promotion to retirement. 
It is the Group’s policy to promote an environment free from
discrimination, harassment and victimisation, where everyone
will receive equal treatment regardless of gender, colour,
ethnic or national origin, disability, age, marital status, sexual
orientation or religion. All decisions relating to employment
practices will be objective, free from bias and based solely
upon work criteria and individual merit.
The Group is responsive to the needs of its employees,
customers and the community at large and is an organisation
that uses everyone’s talents and abilities to the full.
Payment of creditors
Whilst the Company does not follow any external code or
standard on payment practice, the policy for the year to 30 June
2002, for all suppliers is to ﬁx terms of payment when agreeing
the terms of each business transaction, to ensure that the
supplier is aware of those terms, and to abide by the agreed
terms of payment. The number of days trade creditors was 42
(2001: nil) for the Company and for the Group 37 (2001: 37).
Statement of Directors’ responsibilities for the 
Annual Report
Company law in the United Kingdom requires the Directors to
prepare ﬁnancial statements for each ﬁnancial year which give
a true and fair view of the state of affairs of the Company and
the Group and of the proﬁt or loss of the Group for that period.
In preparing these ﬁnancial statements, the Directors have:
• selected suitable accounting policies and applied 
them consistently;
• made judgements and estimates that are reasonable and
prudent;
• followed applicable United Kingdom accounting
standards; and
• prepared the ﬁnancial statements on the going 
concern basis.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time
the ﬁnancial position of the Company and enable them to
ensure that the ﬁnancial statements comply with the Companies
Act 1985. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for ensuring that the Directors’
Report and other information included in the Annual Report is
prepared in accordance with Company law in the United
Kingdom. They are also responsible for ensuring that the
Annual Report includes information required by the Listing
Rules of the Financial Services Authority.
The Annual Report is available on the Company’s web site.
The maintenance and integrity of the web site is the responsibility
of the Directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the
auditors accept no responsibility for any changes that may
have occurred to the information contained in the ﬁnancial
statements since they were initially presented on the web site.
Legislation in the United Kingdom governing the preparation
and dissemination of the ﬁnancial statements and other
information included in annual reports may differ from
legislation in other jurisdictions.
Auditors
The auditors, RSM Robson Rhodes, who were appointed during
the period, are willing to continue in ofﬁce and a resolution to
reappoint them will be proposed at the Annual General Meeting.
Approval
The Report of the Directors was approved by the Board and
signed on its behalf by:
Peter Chapman
Secretary
9 September 2002 18 Reed Health Group plc
The Board is pleased to present its remuneration report for the
year ended 30 June 2002.
Remuneration policy
The Board has delegated its powers to determine the Company’s
remuneration policy for senior executives to the Remuneration
Committee, the members of which during the year were Lord
Sawyer, Alan Dexter and James Reed. Subsequent to the year
end Daphne Statham was appointed to the Committee.
In determining its remuneration policy, the Committee has
paid regard to the principles and provisions of good corporate
governance contained in the Combined Code published by
the Committee on Corporate Governance. The Remuneration
Committee pays attention to the ﬁndings of independent
consultants to assist in determining the remuneration
packages of Executive Directors. Its aim is to provide a
remuneration package sufﬁcient to attract, motivate and retain
Directors and to reward them for good performance.
In the year to 30 June 2002 the Executive Directors’
remuneration consisted of three parts:
• Basic salary and beneﬁts
Basic salary for the individual is determined by their level
of experience and the rate of basic pay for similar roles in
comparable companies. The Company also provides a
car allowance, pension contribution and private and
permanent health insurance.
• Cash bonus
An annual bonus, which is non-pensionable, is payable
based on individual performance criteria speciﬁc to the
executive’s role and the overall ﬁnancial performance of the
Group at the proﬁt before tax and earnings per share levels.
In successful years, bonuses can form a major part of the
remuneration package of Executive Directors.
• Share options
The Committee believes that share ownership by
Executive Directors encourages above average
performance since the interests of shareholders and
management are aligned. Accordingly it is the
Committee’s policy to grant share options to Executive
Directors, provided adequate performance has been
demonstrated. Options are not exercisable unless the
Company meets the performance related criteria
determined by the Committee from time to time.
The fees of Non-Executive Directors are determined by the full
Board. The Non-Executive Directors are not eligible for any
additional employment related beneﬁts.
Share option schemes
The Company operates a number of employee share option
schemes available to Executive Directors and senior
management, all of which now have performance conditions
attached to them. The Remuneration Committee has agreed
that the exercise of options is conditional upon the growth in the
Company’s adjusted earnings per share of at least ﬁve percent
above the growth in the UK retail prices index per annum over
three consecutive ﬁnancial years after the date of grant.
It is the Company’s intention to operate other share option
schemes which will provide long-term savings opportunities
for all the Group’s employees, as well as encouraging them 
to participate in the success of the Group.
Directors’ service contracts
Executive Directors have contracts of service terminable on 
no more than one year’s notice. Non-Executive Directors do
not have contracts of employment but are offered letters of
appointment for three years.
Directors’ emoluments
Christa Echtle and Malcolm Paget were each appointed as
Directors on 8 June 2001. Malcolm Paget resigned on 
20 November 2001. Lord T om Sawyer, Alan Dexter and 
Remuneration Report
Salary Beneﬁts Annual Compensation 2002 2001
and fees in kind Bonus – loss of ofﬁce Total Total
£’000 £’000 £’000 £’000 £’000 £’000
Non-Executives
Lord Tom Sawyer 35–– –35 –
Alan Dexter 30–– –30 –
James Reed 25–– –25 –
Daphne Statham 6–– – 6 –
Executives
Christa Echtle 135 7 50 – 192 8
Desmond Doyle 60 6 50 – 116 –
Malcolm Paget 35 3 – 37 75 7
Aggregate emoluments 326 16 100 37 479 15 19 Reed Health Group plc
James Reed were each appointed as a Director on 5 July 2001.
Desmond Doyle was appointed as a Director on 26 November
2002 and Daphne Statham was appointed as a Director on 
1 April 2002.
The ﬁgures above represent emoluments earned as Directors
during the relevant ﬁnancial year. All amounts are paid in that
year with the exception of the annual bonus.
Directors’ pensions
The Company operates a deﬁned contribution pension scheme
that the Executive Directors are eligible to join. Alternatively, at
the request of the Executive Director, contributions can be paid
to individual personal pension plans. 
Employer contributions of £11,000 (2001: £nil) and £3,000
(2001: £nil) were paid to personal pension plans for 
Christa Echtle and Desmond Doyle respectively. No pension
contributions are made for Non-Executive Directors.
No pension contribution was made for Malcolm Paget in the
year (2001: £nil).
Directors’ interests
The beneﬁcial and family interests of Directors of the Company
at 30 June 2002 in the share capital of the Company
according to the register of Directors’ interests maintained
under Section 325 of the Companies Act 1985 were:
The non-beneﬁcial interest of James Reed includes 2,941,000
Ordinary Shares held as a co-trustee of the Reed Charity and
8,045,775 “B” Ordinary Shares held as co-trustee of family
trusts (except to the extent that he has a life-interest in those
trusts). His beneﬁcial interest includes 134,875 Ordinary
Shares representing his own and his spouse’s personal
holdings as well as 2,274,258 Ordinary Shares and 3,320,170
“B” Ordinary Shares representing his life-interests in family
trusts, and 5,000,000 “B” Ordinary Shares as a result of his
family interest in a family trust. 
There have been no changes in Directors’ shareholdings
since the year end. 
Directors’ share options
Details of options held by Directors during the year were:
The market price of the shares at 30 June 2002 was 146.5p and
the low and high for the year was 98.5p and 181.5p.
The options granted to Christa Echtle formed part of the
arrangements on the demerger of the Group from Reed
Executive plc and were disclosed in the documentation
relating to the demerger. These options are not subject to any
performance conditions. Share options granted to Desmond
Doyle are only exercisable if growth in the Company’s
adjusted earnings per share is at least ﬁve percent above the
growth in the UK retail prices index per annum over three
consecutive ﬁnancial years after the date of grant.
There have been no further changes in Directors’ options held
since the year end.
On behalf of the Board
Lord Sawyer
Chairman, Remuneration Committee
9 September 2002
Ordinary Ordinary “B” Ordinary “B” Ordinary
Shares Shares Shares Shares
30/06/02 30/06/01 30/06/02 30/06/01
Non-Executives
Lord Tom Sawyer – – – –
Alan Dexter – – – –
James Reed – beneﬁcial 2,409,133 2,409,133 8,320,170 8,320,170
– non-beneﬁcial 2,941,000 2,941,000 8,048,775 8,048,775
Daphne Statham – – – –
Executives
Christa Echtle 90,909 90,909 – –
Desmond Doyle – – – –
No. of options
Granted Exercised Date from
At start during during At end Exercise when Expiry 
of year year year of year Price exercisable date
Christa Echtle – 392,156 – 392,156 £1.02 06/07/04 06/07/11
– 392,156 – 392,156 £1.02 06/07/05 06/07/11
– 196,080 – 196,080 £1.02 06/07/06 06/07/11
– 980,392 – 980,392
Desmond Doyle – 148,700 – 148,700 £1.345 07/03/05 07/03/12 20 Reed Health Group plc
The Company complied throughout the year with the Code
provisions set out in Section 1 of the Combined Code published
by the Committee on Corporate Governance in June 1998
(“the Code”) except where indicated in this statement. 
The manner in which the Group applies the principles of good
governance contained in the Code is described in the
appropriate parts of this annual report. Consequently the
application by the Company of the Code’s principles to
remuneration matters on pages 18 and 19 should be read in
conjunction with the statement below. 
Directors
During the year, the Company has maintained a Board of
Directors which leads and controls the Company by holding at
least ten meetings a year at which current performance is
examined and directions are given. Regular reports on
monthly performance and other ad hoc matters of importance
to the Company ensure that the Board is supplied in a timely
manner with the information necessary to make an informed
judgement. Additional meetings are held to discuss the
Company’s long term strategic focus and other matters, such
as acquisitions, as necessary.
In accordance with the Company’s articles of association and
the Code, each Director is subject to re-election by the
Company’s shareholders at the Annual General Meeting
immediately following appointment and at least every three
years thereafter.
The Board has a schedule of matters speciﬁcally reserved to it
for decision and has written terms of reference for the various
committees to which it has delegated its authority in certain
matters. All Directors have access to the advice and services
of the Company Secretary who is also responsible for
ensuring that Board procedures are followed. There is also a
procedure in place for any Director to take independent
professional advice if necessary, at the Company’s expense.
The Board is led by the Non-Executive Chairman Lord Sawyer.
The day-to-day running of the Company’s business is delegated
to an Executive team of Christa Echtle, the Chief Executive, and
Desmond Doyle, the Group Finance Director. The Board has
three further Non-Executive Directors with health, social care
and recruitment backgrounds. Brief biographies of the Directors
are given on page 15. With the exception of James Reed, all the
Non-Executives are considered to be independent, not being
past Executives of the Company and other than their
shareholdings and fees they have no ﬁnancial interest in the
Company. James Reed is a Director of Reed Executive plc
which provides the Group with certain IT and property related
services details of which are set out in note 6 to the ﬁnancial
statements. Non-Executives comprise more than a third of 
the Board. Alan Dexter acts as the Company’s Senior 
Non-Executive Director.
The Board has procedures that allow all Directors to deepen
their knowledge of their role and responsibilities. Appropriate
training, brieﬁngs and induction are available to all Directors
on appointment, taking into account existing qualiﬁcations
and experience. 
Board committees
The Board operates an Audit Committee and a Remuneration
Committee. The Board does not have a Nominations
Committee as it is deemed unnecessary in view of the size of
the Company. All Board nominations are considered by the
full Board of Directors. The members of each committee are
listed on page 14. Each of the Board’s committees has
carefully drafted terms of reference and consists entirely of
Non-Executive Directors.
The Audit Committee consists of all Non-Executive Directors
and meets at least twice a year. The Committee, which is
chaired by Alan Dexter, considers and recommends the
appointment and fees of the external auditors, reviews the
scope and results of the annual external audit, considers the
independence and objectivity of the external auditors, reviews
prior to publication, the interim results, preliminary
announcement and the annual ﬁnancial statements and
reviews the Group’s system of internal control.
The Remuneration Committee consists of all Non-Executive
Directors and meets at least twice a year. Whilst the inclusion
of James Reed, who is not an independent Director, is a
breach of the Combined Code, the Committee welcomes his
contribution in determining Executive remuneration given that
he is also a signiﬁcant shareholder. The Committee, which is
chaired by Lord Sawyer, determines policy on Executive
Directors’ remuneration. The Committee also determines the
criteria on which employee share option schemes and
Corporate Governance 21 Reed Health Group plc
invitations to participate are to be offered. The report of the
Remuneration Committee on the policies which it applies and
on the Executive Directors’ remuneration packages is set out
on pages 18 and 19. Appointments of new Directors to the
Board are also considered by the Board of the Company.
Internal controls
The Directors are responsible for the Group’s system of
internal control and for reviewing its effectiveness whilst the
role of management is to implement Board policies on risk
management and control to meet its obligations under the
T urnbull guidance. It should be recognised that the Group’s
system of internal control is designed to manage rather than
eliminate the risk of failure to achieve the Group’s business
objectives and can only provide reasonable, and not absolute,
assurance against material misstatement or loss.
The Group demerged from Reed Executive plc on 4 July 2001.
Since that date the Group has operated a risk management
process which is embedded in normal management and
governance processes. 
The Group operates a series of controls which are 
communicated through operating and control manuals in
existence at both a divisional and Group level. These controls
include, but are not limited to, the annual strategic planning and
budgeting process, a clearly deﬁned organisational structure
with authorisation limits, reviews by senior management of
monthly ﬁnancial and operating information including
comparisons with budgets. 
As part of the annual strategic planning and budgeting process,
each division identiﬁes signiﬁcant risks, the probability of those
risks occurring, their potential ﬁnancial impact and the plans for
managing and mitigating each of those risks. These plans are
then discussed with the Group’s Executive Directors as part of
the strategic planning process. The plans are discussed,
updated and reviewed on a six-monthly basis.
On 28 May 2002 the Company acquired The Locum Group. 
As a result of the changes that have taken place during the
year, the Board has deferred its annual assessment of the
effectiveness of the system of internal controls. It has asked that
a review be undertaken across the enlarged Group to identify
and document key risks and associated procedures and controls
with a view to conforming policy and procedure across the Group.
This exercise is expected to be completed by December this
year whereupon a full report will be given to the Board and a
formal review of the effectiveness of controls undertaken.
In common with a number of other smaller quoted 
companies, the Company does not have an internal audit
function. The Audit Committee considers the need for such 
a function at the meeting with the external auditors to review the
full year results. Signiﬁcant risk issues are referred to the Board
for consideration.
Communication with shareholders
The Board attaches a high priority to communications with
shareholders. Presentations are made to shareholders,
institutions and analysts by the Chief Executive and Group
Finance Director at least twice a year to coincide with results
announcements. Additional dialogue with institutional
shareholders is entered into as necessary, mindful of the rules
on insiders and price-sensitive information.
The Annual General Meeting is normally attended by all Directors
and provides an opportunity for communication with those
institutional and individual shareholders attending. Notice of the
Annual General Meeting is given to shareholders at least 20
working days in advance and separate resolutions are proposed
on each substantially separate issue. During the meeting the
Chairman also invites questions from shareholders. 
Where resolutions at the Annual General Meeting are dealt with
by show of hand, the results of proxy votes for and against are
still announced. After the Annual General Meeting shareholders
can obtain a resume of the meeting and the voting ﬁgures by
writing to the Company Secretary at the registered ofﬁce shown
on page 14. The Annual General Meeting is to be held on 
26 November 2002. The resolutions to be proposed at the
Annual General Meeting, together with explanatory notes, appear
in the separate Notice of Annual General Meeting sent to all
shareholders.
Financial and other information about the Company is
available on the Company’s web site at www.reedhealth.co.uk
Going concern
The Board is satisﬁed that the Group has adequate ﬁnancial
resources to continue to operate for the foreseeable future.
For this reason the Directors continue to adopt the going
concern basis in preparing the ﬁnancial statements. 22 Reed Health Group plc
Independent Auditors’ Report to the
Shareholders of Reed Health Group plc
We have audited the ﬁnancial statements on pages 23 to 40.
Respective responsibilities of Directors and auditors
The Directors’ responsibilities for preparing the Annual Report
and the ﬁnancial statements in accordance with applicable
law and United Kingdom Accounting Standards are set out in
the Statement of Directors’ Responsibilities.
Our responsibility is to audit the ﬁnancial statements in
accordance with relevant legal and regulatory requirements,
United Kingdom Auditing Standards and the Listing Rules of
the Financial Services Authority. 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
Act 1985. We also report to you if, in our opinion, the
Directors’ Report is not consistent with the ﬁnancial
statements, if the Company has not kept proper accounting
records, if we have not received all the information and
explanations we require for our audit, or if information
speciﬁed by law or the Listing Rules regarding directors’
remuneration and transactions with the Company and other
members of the Group is not disclosed.
We review whether the Corporate Governance Statement
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 information contained in the Annual Report 
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. 
Our responsibilities do not extend to any information 
outside the Annual Report.
Basis of audit opinion
We conducted our audit in accordance with United Kingdom
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 Company’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.
Opinion
In our opinion the ﬁnancial statements give a true and fair view
of the state of affairs of the Company and the Group as at 
30 June 2002 and of the Group’s proﬁt for the year then
ended and have been properly prepared in accordance with
the Companies Act 1985.
RSM Robson Rhodes
Chartered Accountants and Registered Auditors
London, England
9 September 2002 23 Reed Health Group plc
Consolidated Proﬁt and Loss Account
for the year ended 30 June 2002
2002 2001
Notes £’000 £’000
Group turnover – continuing
Existing operations 73,498 66,776
Acquired operations 4,847 –
Total Group turnover 2 78,345 66,776
Cost of sales (63,180) (55,509)
Gross proﬁt 2 15,165 11,267
Administrative expenses 2 (10,274) (6,884)
Operating proﬁt before goodwill amortisation and exceptional item 5,179 4,383
Goodwill amortisation (132) –
Exceptional item 4 (156) –
Group operating proﬁt 4,891 4,383
Group operating proﬁt – continuing 
Existing operations 4,693 4,383
Acquired operations 198 –
Total Group operating proﬁt 4,891 4,383
Net interest receivable/(payable) and similar charges 3 48 (45)
Proﬁt on ordinary activities before taxation 4 4,939 4,338
T ax on proﬁt on ordinary activities 7 (1,588) (1,344)
Proﬁt for the ﬁnancial year 3,351 2,994
Dividends/contributions to group 8 (1,094) (2,779)
Retained proﬁt for the year 2,257 215
Earnings per share p p
Basic 9 7.27 6.69
Diluted 9 7.22 6.69
Adjusted earnings per share before goodwill amortisation 
and exceptional item
Basic 9 7.89 6.69
Diluted 9 7.84 6.69
There were no recognised gains and losses other than those noted in the consolidated proﬁt and loss account. There were no differences
between historical cost proﬁt and losses and the ﬁgures noted in the consolidated proﬁt and loss account.
Prior year comparatives in all instances have been stated on a proforma basis (see Notes to the Financial Statements 1b). 24 Reed Health Group plc
Consolidated Balance Sheet
at 30 June 2002
2002 2001
Notes £’000 £’000
Fixed assets
Intangible assets 10 31,437 –
T angible assets 11 1,075 438
32,512 438
Current assets
Debtors due within one year 14 19,702 10,934
Cash at bank and in hand 1,139 296
20,841 11,230
Creditors: Amounts falling due within one year 15 (19,692) (4,187)
Net current assets 1,149 7,043
Total assets less current liabilities 33,661 7,481
Creditors: Amounts falling due after more than one year 16 (2,131) –
Provisions for liabilities and charges 18 (12) (3)
Net assets 31,518 7,478
Capital and reserves
Called up share capital 19 1,193 895
Share premium account 20 21,485 –
Merger reserve 20 6,317 6,317
Capital redemption reserve 20 51 51
Proﬁt and loss account 20 2,472 215
Equity shareholders’ funds 21 31,518 7,478
The ﬁnancial statements were approved by the Board on 9 September 2002 and were signed on its behalf by:
Christa Echtle Desmond Doyle
Chief Executive Group Finance Director 25 Reed Health Group plc
Company Balance Sheet
at 30 June 2002
2002
Notes £’000
Fixed assets
Investments in Group undertakings 12 35,381
Current assets
Debtors 14 69
Cash at bank and in hand –
69
Creditors: Amounts falling due within one year 15 (10,220)
Net current liabilities (10,151)
Total assets less current liabilities 25,230
Creditors: Amounts falling due after more than one year 17 (2,000)
Net assets 23,230
Capital and reserves
Called up share capital 19 1,193
Share premium account 20 21,485
Capital redemption reserve 20 51
Proﬁt and loss account 20 501
Equity shareholders’ funds 21 23,230
The ﬁnancial statements were approved by the Board on 9 September 2002 and signed on its behalf by:
Christa Echtle Desmond Doyle
Chief Executive Group Finance Director 26 Reed Health Group plc
2002 2001
Notes £’000 £’000
Net cash inﬂow from operating activities 22 7,212 1,910
Returns on investment and servicing of ﬁnance 23 48 (45)
Taxation paid (926) (2,530)
6,334 (665)
Capital expenditure and ﬁnancial investment
Payments for tangible ﬁxed assets (476) (337)
Acquisitions and disposals
Purchase of subsidiary undertakings 13 (34,486) –
Cash acquired with subsidiary undertakings 13 24 –
(34,462) –
Dividends/contributions paid (295) (2,779)
Net cash outﬂow before ﬁnancing (28,899) (3,781)
Financing
New bank loans 9,000 –
Financing costs paid (41) –
Repayment of bank loans (1,000) –
Contribution from group – 4,077
Issue of Ordinary Shares 22,366 –
Expenses of share issue (583) –
29,742 4,077
Increase in cash 843 296
Consolidated Cash Flow Statement
for the year ended 30 June 2002 27 Reed Health Group plc
Notes to the Financial Statements
30 June 2002
1. ACCOUNTING POLICIES
a. Basis of accounting
The ﬁnancial statements are prepared in accordance with applicable accounting standards under the historical cost convention.
As permitted by Section 230 of the Companies Act 1985, the proﬁt and loss account of the parent company has not been separately
presented in the ﬁnancial statements.
b. Basis of consolidation
The transfer of Reed Health Limited and its subsidiaries to Reed Health Group plc has been accounted for in accordance with the
principles of merger accounting as set out in FRS6 “Acquisitions and Mergers”. The ﬁnancial statements are therefore presented as 
if Reed Health Limited and its subsidiaries had been owned and controlled by Reed Health Group plc throughout.
Reed Health Limited was created through an internal reorganisation within Reed Executive plc which resulted in the transfer to it of Reed
Executive plc’s health activities with effect from 11 May 2001. The health activities included both subsidiary companies and certain
unincorporated business activities of Reed Executive plc, which were themselves acquired by Reed Health Group plc on 4 July 2001.
Comparatives have been prepared as if the continuing operations of the Reed Health Group plc were in existence for the whole of
2000 and 2001. No comparatives are reported for the Company as the Company accounts relate to the period from incorporation on
11 May 2001 to 30 June 2002.
The Locum Group Limited and all its subsidiary undertakings have been accounted for at 30 June 2002 using acquisition accounting.
The results of subsidiary undertakings acquired during the ﬁnancial year are included from the effective date of acquisition on 28 May 2002.
c. Goodwill
Purchased goodwill is the excess of the cost of an acquired entity over the aggregate of the fair values of that entity’s identiﬁable
assets and liabilities and is shown on the balance sheet as an asset. Goodwill is amortised evenly over its estimated useful economic
life of 20 years. In addition to systematic amortisation, the book value is written down to recoverable amount when any impairment is
identiﬁed.
d. Investments
The investment in Reed Health Limited in the Company Balance Sheet is recorded at the nominal value of shares issued for the
purposes of the demerger, in accordance with the treatment allowed by Section 131, Companies Act 1985. On consolidation the
difference between the nominal value of shares issued and the net assets of Reed Health Limited on acquisition is recorded as a
merger reserve. The investment in The Locum Group Limited is recorded at its fair value at the date of completion.
The book value of investments is written down when any impairment is identiﬁed.
e. Tangible ﬁxed assets and depreciation
All ﬁxed assets are included at cost and depreciation is provided evenly on that cost, to write them down to their estimated residual
values over their expected useful lives. Where there is evidence of impairment, ﬁxed assets are written down to recoverable amount. 
The principal annual rates used for assets are:
Computer equipment & software 33.3%
Ofﬁce equipment, ﬁxtures and ﬁttings 12.5 – 20%
Leasehold improvements over term of the lease
f. Turnover
Turnover consists of the invoiced value (excluding VAT) for goods and services supplied to third parties.
g. Pensions
The Group operates a number of deﬁned contribution pension schemes. The pension costs for the schemes represent contributions
payable by the Group in the year. 28 Reed Health Group plc
1. ACCOUNTING POLICIES continued
h. Deferred taxation
The payment of taxation is deferred or accelerated because of timing differences between the treatment of certain items for accounting
and taxation purposes. Full provision for deferred taxation is made under the liability method, without discounting, on all timing
differences that have arisen, but not reversed by the balance sheet date, unless such provision is not permitted by FRS 19.
Deferred tax assets are recognised to the extent it is regarded as more likely than not that they will be recovered.
i. Leased assets
Rentals payable under operating leases are charged to the proﬁt and loss account on a straight line basis over the period of the leases.
2. SEGMENTAL REPORTING 
Turnover, cost of sales, gross proﬁt, administrative expenses, goodwill amortisation, exceptional item and operating proﬁt are
analysed between existing operations and operations acquired in the year:
2002 Existing Acquired Total
Operations Operations Continuing
Operations
£’000 £’000 £’000
Turnover 73,498 4,847 78,345
Cost of sales (59,346) (3,834) (63,180)
Gross proﬁt 14,152 1,013 15,165
Administrative expenses (9,303) (683) (9,986)
Goodwill amortisation – (132) (132)
Exceptional item (156) – (156)
Group operating proﬁt 4,693 198 4,891
2001 Existing Acquired T otal
Operations Operations Continuing
Operations
£’000 £’000 £’000
Turnover 66,776 – 66,776
Cost of sales (55,509) – (55,509)
Gross proﬁt 11,267 – 11,267
Administrative expenses (6,884) – (6,884)
Group operating proﬁt 4,383 – 4,383
All Group turnover is derived from the United Kingdom. The Directors consider all operations to form one class of business.
3. NET INTEREST RECEIVABLE/(PAYABLE) AND SIMILAR CHARGES
2002 2001
£’000 £’000
Interest receivable 92 –
Interest payable (44) (45)
Net interest receivable/(payable) 48 (45)
Interest payable comprises interest on:
Bank loans and overdrafts (44) (45)
Notes to the Financial Statements continued
30 June 2002 29 Reed Health Group plc
4. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
This is arrived at after charging:
2002 2001
£’000 £’000
Amortisation of goodwill 132 –
Depreciation of tangible ﬁxed assets 237 108
Loss on disposal of ﬁxed assets 7 –
Exceptional item – costs related to the demerger of the Group 156 –
Auditors remuneration
– audit services 66 50
– non-audit services 163 79
Operating lease rentals
– plant and machinery 116 104
– land and buildings 362 294
In addition the auditors received £111,000 (2001: £nil) for services in connection with the acquisition of The Locum Group Limited,
£98,000 was capitalised in arriving at goodwill and £13,000 written off to the share premium account.
5. STAFF COSTS
Average monthly number of employees, including Directors:
2002 2001
No. No.
Recruitment Consultants 140 109
Head Ofﬁce 40 35
3,093 2,921
£’000 £’000
Staff costs, including Directors:
Wages and salaries 4,183 3,120
Social security costs 404 278
Pension costs – deﬁned contribution scheme 43 36
4,630 3,434
In addition to the permanent staff whose numbers and costs are shown above, the Group employed 2,913 temporary staff (2001: 2,777).
Information on Directors’ remuneration is included in the Remuneration Report on pages 18 and 19. This information has been audited.
6. RELATED PARTY TRANSACTIONS
During the year the Group entered into transactions on an arm’s length basis with Reed Executive plc to the value of £1,145,000. 
The services provided were IT and systems provision and support, property rental, payroll services and the provision of temporary
staff. No comparisons are available for 2001 because Reed Health Limited operated as part of Reed Executive plc. At 30 June 2002
the Group owed Reed Executive plc £1,062,000 (2001: £253,000).
In the same period, the Group provided debt collection services on an arm’s length basis to Reed Executive plc to the value of
£173,000 (2001: £nil). At 30 June 2002, Reed Executive plc owed the Group £6,000 (2001: £nil).
Reed Executive plc is regarded as a related party because of its previous ownership of Reed Health Limited, James Reed being a Director
of both Reed Executive plc and Reed Health Group plc, and the Reed family retaining signiﬁcant shareholdings in both companies. 30 Reed Health Group plc
Notes to the Financial Statements continued
30 June 2002
7. TAXATION
2002 2001
£’000 £’000
United Kingdom Corporation Tax
Current tax on income for the year 1,591 1,341
Deferred taxation net (reversal)/origination of timing differences (3) 3
T ax on proﬁt on ordinary activities 1,588 1,344
Proﬁt on ordinary activities before taxation 4,939 4,338
Theoretical UK Corporation T ax rate of 30% 1,482 1,301
Effects of:
Goodwill amortisation not tax deductible 40 –
Other expenditure not tax deductible 66 43
Accelerated capital allowances 3 (3)
1,591 1,341
8. DIVIDENDS
2002 2001
£’000 £’000
Interim dividend paid of 0.66p per share 295 –
Proposed ﬁnal dividend of 1.34p per share 799 –
Contributions to group – 2,779
T otal dividend in year 1,094 2,779
The contributions to group reﬂect the proﬁts retained within Reed Executive plc prior to the demerger. 31 Reed Health Group plc
9. EARNINGS PER SHARE
Basic earnings per share is calculated using the earnings attributable to ordinary shareholders and the weighted average number of
Ordinary Shares in issue during the year. 
Diluted earnings per share is calculated by adjusting the Ordinary Shares in issue by the potential dilutive effect of share options. 
There are no other potentially dilutive categories other than share options.
The basis of the earnings and weighted average number of shares used in the calculations are set out below:
2002 2001
Weighted Weighted
average number average number
Earnings of shares EPS Earnings of shares EPS
£’000s thousands pence £’000s thousands pence
FRS14 Basis
Basic earnings per share 3,351 46,126 7.27 2,994 44,733 6.69
Dilutive effect of options – 281 (0.05) –––
Diluted earnings per share 3,351 46,407 7.22 2,994 44,733 6.69
Adjusted to exclude goodwill 
amortisation and exceptional item
Basic – FRS14 Basis 3,351 46,126 7.27 2,994 44,733 6.69
Exceptional item 156 – 0.34 –––
Goodwill amortisation 132 – 0.28 –––
Adjusted basic earnings per share 3,639 46,126 7.89 2,994 44,733 6.69
Diluted – FRS14 Basis 3,351 46,407 7.22 2,994 44,733 6.69
Exceptional item 156 – 0.34 –––
Goodwill amortisation 132 – 0.28 –––
3,639 46,407 7.84 2,994 44,733 6.69
10. INTANGIBLE ASSETS
Goodwill
£’000
Cost
At 1 July 2001 –
Additions 31,569
At 30 June 2002 31,569
Amortisation
At 1 July 2001 –
Charged in the year 132
At 30 June 2002 132
Net book value
At 30 June 2002 31,437
At 30 June 2001 – 32 Reed Health Group plc
Notes to the Financial Statements continued
30 June 2002
11. TANGIBLE FIXED ASSETS
Group
Computer Ofﬁce Equipment, Leasehold
Equipment Fixtures Property 
and Software and Fittings Improvements Total
£’000 £’000 £’000 £’000
Cost
At 1 July 2001 66 382 – 448
Capital expenditure 267 209 – 476
Subsidiary acquisition 739 298 66 1,103
Disposals (21) – – (21)
At 30 June 2002 1,051 889 66 2,006
Depreciation
At 1 July 2001 6 4 – 10
Subsidiary acquisition 516 145 36 697
Disposals (13) – – (13)
Charged in year 112 123 2 237
At 30 June 2002 621 272 38 931
Net book value
At 30 June 2002 430 617 28 1,075
At 30 June 2001 60 378 – 438
Company
At 30 June 2002 the Company had no ﬁxed assets on its balance sheet (2001: £nil).
12. INVESTMENT IN GROUP UNDERTAKINGS
Company
Shares
£’000
Cost and net book value
On incorporation –
Additions (note 13) 35,381
At 30 June 2002 35,381
Details of the principal operating subsidiaries are set out below:
Company Interest
Principal trading in Ordinary Shares Country of 
subsidiaries and Voting rights incorporation Principal activity
Reed Health Limited 100% Great Britain Recruitment
Agency Nursing Limited* 100% Great Britain Recruitment
The Locum Group Limited 100% Great Britain Recruitment
Caroline Pelham Limited* 100% Great Britain Recruitment
Julia Principal Limited* 100% Great Britain Recruitment
LG International Employment Services Limited* 100% Great Britain Recruitment
LJO Associates PTY Limited* 100% Australia Recruitment
* The interest of Reed Health Group plc is held through intermediate holding companies. 33 Reed Health Group plc
13. ACQUISITIONS
On 4 July 2001 the Company acquired 100% of the issued share capital of Reed Health Limited. Under the principles of merger 
accounting as set out in FRS 6 “ Acquisitions and Mergers”, the Company’s investment in Reed Health Limited is £895,000 being the 
nominal value of shares issued by the Company.
On 28 May 2002 the Group acquired 100% of the issued share capital of The Locum Group Limited whose assets and liabilities were:
Initial Accounting Provisional
book value policy alignment fair value
£’000 £’000 £’000
T angible ﬁxed assets 526 (120) 406
Debtors 7,659 – 7,659
Cash at bank and in hand 24 – 24
Creditors (4,863) – (4,863)
T axation – current (297) – (297)
Deferred tax provision (12) – (12)
Net separable assets 3,037 (120) 2,917
Net assets acquired 2,917
Goodwill 31,569
Cash consideration 34,486
The accounting policy alignment was made to reﬂect the difference in accounting policy relating to the depreciation of ﬁxed assets.
The fair values are considered to be provisional at this time as the Group is at an early stage of integrating the acquired operations.
Since the acquisition, The Locum Group Limited contributed £369,000 to the Group’s operating cash ﬂow, paid £2,000 in respect of
net returns on investments and servicing of ﬁnance, paid £nil in respect of taxation and paid £8,000 in respect of capital expenditure
and ﬁnancial investment.
Pre-acquisition performance of The Locum Group Limited
7 months from 1 November 2001 £’000
Turnover 25,631
Cost of sales (20,088)
Gross proﬁt 5,543
Administrative expenses (3,800)
Goodwill amortisation (306)
Operating proﬁt 1,437
Net interest receivable 6
Proﬁt before taxation 1,443
T axation (434)
Proﬁt for the ﬁnancial period 1,009
T otal recognised gains 1,009
Year ended 31 October 2001
Proﬁt for the ﬁnancial year 1,175 34 Reed Health Group plc
Notes to the Financial Statements continued
30 June 2002
14. DEBTORS
Group Company
2002 2001 2002
£’000 £’000 £’000
Trade debtors 18,056 10,854 –
Other debtors 1,188 12 –
Prepayments and accrued income 458 68 69
19,702 10,934 69
15. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Group Company
2002 2001 2002
£’000 £’000 £’000
Bank loan 6,000 – 6,000
Trade creditors 1,481 3,695 –
Amounts owed to group undertakings – – 3,281
Corporation tax 1,062 100 –
Other taxation and social security 3,744 ––
Other creditors 4,621 308 –
Accruals and deferred income 1,985 84 140
Proposed dividends 799 – 799
19,692 4,187 10,220
Reed Health Limited operated as part of Reed Executive plc in the previous year, with costs being recharged internally as deemed 
appropriate. Therefore the previous years ﬁgures are not directly comparable.
16. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Group Company
2002 2001 2002
£’000 £’000 £’000
Deferred consideration 131 – –
Bank loan 2,000 – 2,000
2,131 – 2,000
The deferred consideration arises on the acquisition of LJO Associates Pty Limited by The Locum Group Limited. 35 Reed Health Group plc
17. BORROWINGS ANALYSIS
Group Company
2002 2001 2002
£’000 £’000 £’000
Due within one year
Bank loans 6,000 – 6,000
Due after more than one year
Bank loans 2,000 – 2,000
Repayable
Due within 1 year 6,000 – 6,000
Over 1 but < 2 years – – –
Over 2 but < 5 years 2,000 – 2,000
After 5 years – – –
8,000 – 8,000
The bank loans and overdraft facility, which are all sterling denominated, are secured by a ﬂoating charge over the assets of the
companies concerned. All are repayable within ﬁve years.
The Group’s only undrawn committed borrowing facilities for which all conditions precedent have been met is a bank variable loan
expiring within three years. The undrawn amount at 30 June 2002 was £4,000,000 (2001: £nil).
The ﬂoating rate sterling borrowings are LIBOR linked and at 30 June 2002 are of an average interest rate of 5.4125%.
18. PROVISIONS FOR LIABILITIES AND CHARGES
Deferred taxation
£’000
Group
At 1 July 2001 3
Transfer from proﬁt and loss account (3)
Subsidiary acquired 12
At 30 June 2002 12
Deferred taxation comprises:
2002 2001
£’000 £’000
Accelerated capital allowances 12 3
12 3 36 Reed Health Group plc
Notes to the Financial Statements continued
30 June 2002
19. SHARE CAPITAL
2002 2001
£’000 £’000
Authorised
50,000,000 Ordinary Shares of 2p each 1,000 1,000
50,000,000 “B” Ordinary Shares of 2p each 1,000 1,000
2,000 2,000
Allotted and fully paid
37,403,372 Ordinary Shares of 2p each 748 450
22,241,400 “B” Ordinary Shares of 2p each 445 445
(2001: 22,492,179 Ordinary and 22,241,400 “B” Ordinary Shares of 2p each)
1,193 895
On incorporation on 11 May 2001 the Company had an authorised share capital of 50,000 Ordinary Shares of £1 each and 50,000 
Redeemable Preference Shares of £1 each.
Ordinary Shares and “B” Ordinary Shares rank pari passu in respect of dividends and other distributions, voting and repayments of 
capital on winding up.
On 11 May 2001 the Company issued 2 Ordinary Shares of £1 each fully paid to subscribers at par.
On 12 June 2001 the Company issued 50,000 Redeemable Preference Shares of £1 each at par.
On 13 June 2001 the Company redeemed the Preference Shares at par.
On 16 June 2001:
• the 50,000 authorised Ordinary Shares of £1 each were sub divided into 50 Ordinary Shares of 2p each;
• the 50,000 authorised Redeemable Preference Shares were re-designated as “B” Ordinary Shares and each divided into 
50 “B” Ordinary Shares of 2p each; and
• the authorised share capital was increased from £100,000 to £2,000,000 by the creation of 47,500,000 Ordinary Shares of 2p 
each and 47,500,000 “B” Ordinary Shares of 2p each.
On 4 July 2001:
• the 2 £1 Ordinary Shares issued on incorporation were repurchased and cancelled; and
• the Company subscribed for the entire issued share capital of Reed Health Limited. Consideration was satisﬁed by the issue of 
22,492,179 Ordinary Shares and 22,241,400 “B” Ordinary Shares in Reed Health Group plc to the shareholders of Reed Health 
Limited and no premium has been recognised in the Company accounts as allowed by Section 131 of the Companies Act 1985.
The Company issued 14,911,193 Ordinary Shares  of 2p each for £1.50 each during the year as part of the funds raised for the 
purchase of The Locum Group Limited. The resulting premium of £22,068,566 has been credited to the share premium account.
Options over Ordinary Shares have been granted under the Company’s various share option schemes. Options over 1,283,772
shares exercisable at varying dates between 6 July 2004 and 7 March 2012, were outstanding at 30 June 2002. 37 Reed Health Group plc
20. RESERVES
Share Share premium Merger Capital redemption Proﬁt and 
capital account reserve reserve loss account
£’000 £’000 £’000 £’000 £’000
Group
At 1 July 2001 895 – 6,317 51 215
Share issue 298 ––––
Premium on share issue – 22,068–––
Expenses of share issue – (583) – – –
Retained proﬁt – – – – 2,257
At 30 June 2002 1,193 21,485 6,317 51 2,472
The merger reserve is included in the Consolidated Balance Sheet following the principles of merger accounting in accordance with 
FRS 6 “Acquisitions and Mergers”, this being the excess of consideration paid over the nominal value of shares issued upon the
acquisition of Reed Health Limited by the Group on 4 July 2001.
Share Share premium Capital redemption Proﬁt and 
capital account reserve loss account
£’000 £’000 £’000 £’000
Company
On incorporation ––––
Share issues 1,193–––
Premium on share issue – 22,068 – –
Expenses of share issue – (583) – –
Capital redemption – – 51 (51)
Retained proﬁt – – – 552
At 30 June 2002 1,193 21,485 51 501
The capital redemption reserve arose through the redemption of Preference Shares as explained in note 19. 38 Reed Health Group plc
Notes to the Financial Statements continued
30 June 2002
21. RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS’ FUNDS
2002 2001
£’000 £’000
Group
T otal recognised gains relating to the ﬁnancial year 3,351 2,994
Dividends/contributions (1,094) (2,779)
Net proceeds of share issue 21,783 895
Increase in shareholders’ funds 24,040 1,110
Opening shareholders’ funds 7,478 6,368
Closing shareholders’ funds 31,518 7,478
Company
T otal recognised gains for the ﬁnancial period 1,646
Dividends (1,094)
Net proceeds of share issues 22,678
Increase in shareholders’ funds 23,230
Opening shareholders’ funds –
Closing shareholders’ funds 23,230
22. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES
2002 2001
£’000 £’000
Operating proﬁt 4,891 4,383
Amortisation of goodwill 132 –
Depreciation of tangible ﬁxed assets 237 108
Loss on disposal of tangible ﬁxed assets 7 –
Working capital movements
Debtors (1,068) (5,022)
Creditors 3,013 2,441
Net cash inﬂow from continuing operating activities 7,212 1,910
23. RETURNS ON INVESTMENT AND SERVICING OF FINANCE
2002 2001
£’000 £’000
Interest received 92 –
Interest paid (44) (45)
48 (45) 39 Reed Health Group plc
24. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2002 2001
£’000 £’000
Increase in cash 843 296
New loans (9,000) –
Repayment of loans 1,000 –
(Increase)/reduction in net (debt)/funds (7,157) 296
Opening net funds 296 –
Closing net (debt)/funds (6,861) 296
25. ANALYSIS OF NET FUNDS/(DEBT)
Acquisition of 
subsidiary excluding 
1 July 2001 Cash ﬂow cash and overdraft 30 June 2002
£’000 £’000 £’000 £’000
Cash at bank and in hand 296 843 – 1,139
Bank overdraft – – – –
Cash 296 843 – 1,139
Borrowings – (8,000) – (8,000)
Net funds/(debt) 296 (7,157) – (6,861)
26. POST BALANCE SHEET EVENTS
On 28 August 2002, the Group entered into a sales ledger ﬁnancing agreement with Barclays Bank plc whereby through conﬁdential
invoice discounting the Group may borrow up to £13 million secured by a ﬂoating charge over the Group’s assets.
In August 2002 the Company set up a wholly owned subsidiary in Calgary, LG Personnel International Limited. The subsidiary
undertaking is expected to commence trading in October 2002.
27. CONTINGENT LIABILITIES
An amount of up to £70,000 is payable to the former owners of LJO Associates Pty Limited, a wholly owned Australian subsidiary of
The Locum Group Limited. The amount is payable by 31 March 2004 dependent upon the performance of the subsidiary. The full
amount of the contingent payment has been provided for in the ﬁnancial statements.
Company
The Company acts as guarantor for the banking requirements of all of its subsidiary undertakings. The Directors are of the opinion that
the likelihood of any default by a member of the Group is remote and as such there is no requirement for any provision to be made in
the ﬁnancial statements.
The Company additionally provides operational guarantees in the ordinary course of business on behalf of its subsidiary
undertakings. The Directors are of the opinion that the likelihood of any default by a member of the Group is remote and as such there
is no requirement for any provision to be made in the ﬁnancial statements. 40 Reed Health Group plc
Notes to the Financial Statements continued
30 June 2002
28. FINANCIAL COMMITMENTS
Capital commitments
As at 30 June 2002 the Group had capital expenditure commitments of £nil contracted for, but not provided in the ﬁnancial statements
(2001: £nil).
As at 30 June 2002 the Company had capital expenditure commitments of £nil contracted for, but not provided in the ﬁnancial statements
(2001: £nil).
Operating lease commitments
The payments which the Group is committed to make in the next year under operating leases are as follows:
2002 2001
£’000 £’000
Land and buildings, leases expiring:
Within one year 110 123
One to ﬁve years 262 204
Beyond ﬁve years 112 140
484 467
Plant and machinery, leases expiring:
Within one year 51 116
One to ﬁve years 74 –
Beyond ﬁve years – –
125 116
The Company had operating lease commitments of £nil at 30 June 2002 (2001: £nil).
29. FINANCIAL ASSETS AND LIABILITIES
The Board policy on derivatives and ﬁnancial instruments is explained in the Financial Review on pages 12 and 13.
Financial assets and liabilities excluding debtors and non debt liabilities are analysed as follows:
2002 2001
£’000 £’000
Cash at bank and in hand 1,139 296
Borrowings (8,000) –
(6,861) 296
All balances are denominated in sterling. There is no material difference between the book value and fair value of the ﬁnancial assets
and liabilities.
The maturity proﬁle of borrowings and related interest rates are shown in note 17.
Market price risk
The Group monitors its exposure to market price risk with regard to interest rate and foreign currency movements. A 1% increase in 
LIBOR would reduce Group proﬁt before tax by £80,000. The Group has no material exposure to exchange rate risk. 41 Reed Health Group plc
NOTICE IS HEREBY GIVEN, that the Annual General Meeting of the Company will be held at Mint House, 77 Mansell Street, London E1 8AF
on 26 November 2002 at 12.30 pm to transact the following business:
Ordinary business
1. T o receive and consider the ﬁnancial statements, together with the reports of the Directors and auditors, for the year ended 30 June 2002.
2. T o declare a ﬁnal dividend of 1.34p per share for the year ended 30 June 2002, payable on the Ordinary and ‘B’ Ordinary Shares of
the Company to all members whose names appear on the Register of Members on 1 November 2002 and that such dividend be paid
on 2 December 2002.
3. T o elect Christa Echtle as a Director
4. T o elect Desmond Doyle as a Director
5. T o elect Lord T om Sawyer as a Non-Executive Chairman
6. T o elect James Reed as a Non-Executive Director
7. T o elect Alan Dexter as a Non-Executive Director
8. T o elect Daphne Statham as a Non-Executive Director 
9. T o appoint RSM Robson Rhodes as auditors of the Company, to hold ofﬁce until the conclusion of the next Annual General Meeting
and to authorise the Directors to determine their remuneration.
Special business
Directors’ authority to allot shares
T o consider, and if thought ﬁt, to pass as an ordinary resolution the resolution set out below:
10. That the Directors be and are generally and unconditionally authorised pursuant to and in accordance with Section 80 of the
Companies Act 1985, and in substitution for any or all authorities previously conferred upon the Directors for the purposes of Section
80 of that Act, to exercise all the powers of the Company to allot relevant securities (within the meaning of that Section) up to an
aggregate nominal amount of £395,000. This authority shall continue in force until the conclusion of the Annual General Meeting in
2003 or on 25 February 2004, whichever shall be earlier, save that the Company may before such expiry make an offer or agreement
which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in
pursuance of such an offer or agreement as if the power conferred hereby had not expired.
Savings-Related Share Option Scheme
T o consider, and if thought ﬁt, to pass as an ordinary resolution the resolution set out below:
11. (a) The Reed Health Group Savings-Related Share Option Scheme (the Scheme), a summary of which is set out in the Appendix to 
the letter to shareholders dated 17 October 2002, be and is hereby approved and that the Directors be and they are 
hereby authorised to do all acts and things necessary to establish and carry it into effect; and
(b) the Directors be and they are hereby authorised to establish a further scheme or schemes containing such provisions as the 
Directors may decide subject to the following:
(i) such schemes must operate within the limit on the number of new ordinary shares which may be made available from time 
to time under the Scheme;
(ii) such schemes must, except to the extent necessary or desirable to take account of overseas tax, securities and exchange 
control laws, contain limitations so as to ensure, so far as the Directors consider practicable, that the participants in such 
schemes obtain no greater beneﬁt than employees participating in the Scheme; and
(iii) once established, the provisions of such schemes may not be amended without the prior approval of the Company in 
general meeting if such approval would be required to amend the comparable provisions in the Scheme.
Note: 
Copies of the full text of the new Scheme may be inspected at the registered ofﬁce of the Company and at the ofﬁces of Slaughter and
May, One Bunhill Row, London EC1Y 8YY at any time during normal business hours on weekdays (Saturdays and public holidays
excepted) up to and including the day of the meeting, and at the venue for the meeting from half an hour before the time ﬁxed for the
meeting until the conclusion of the meeting.
Notice of Annual General Meeting 42 Reed Health Group plc
Special business continued
Disapplication of pre-emption rights
T o consider, and if thought ﬁt, to pass as a special resolution the resolution set out below:
12. That the Directors be and are empowered pursuant to Section 95 of the Companies Act 1985 and in substitution for any or all 
authorities previously conferred upon the Directors for the purposes of that Section, to allot equity securities (within the meaning of 
Section 94(2) of the Companies Act 1985) pursuant to the authority conferred by Resolution 10 above as if the pre-emption provisions
of Section 89(1) of that Act did not apply to any such allotment provided that this power shall be limited:
(a) to the allotment of equity securities in connection with a rights issue or open offer in favour of shareholders where the equity 
securities respectively attributable to the interests of all shareholders are proportionate (as nearly as they may be) to the 
respective numbers of shares held by them (but subject to such exclusions or other arrangements as the Directors may deem 
necessary or expedient to deal with legal or practical problems under the laws of any territory or the requirements of any 
regulatory body or any stock exchange or in connection with fractional entitlements); and
(b) to the allotment (otherwise than pursuant to (a) above) of equity securities up to an aggregate nominal amount of £59,640.
This authority shall continue in force until the conclusion of the Annual General Meeting in 2003 or on 25 February 2004, whichever 
shall be the earlier, save that the Company may before such expiry make an offer or agreement which would or might require equity 
securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of such an offer or agreement as if
the power conferred hereby had not expired.
Company’s authority to purchase its own shares
T o consider and if thought ﬁt, to pass as a special resolution the resolution set out below:
13. That the Company be generally and conditionally authorised to make market purchases (as deﬁned in Section 163 of the Companies
Act 1985) of its Ordinary Shares of 2p each provided that:
(a) the Company does not purchase under this authority more than 5,610,500 Ordinary Shares;
(b) the Company does not pay less than 2p for each Ordinary Share;
(c) the Company does not pay more for each Ordinary Share than 105% of the average of the middle market price of the Ordinary
Shares for the ﬁve business days immediately preceding the date on which the Company agrees to buy the Ordinary Shares
concerned;
(d) this authority shall continue in force until the conclusion of the Annual General Meeting in 2003 or on 25 February 2004,
whichever shall be the earlier; and
(e) the Company may agree before the authority terminates under (d) above to purchase Ordinary Shares where the purchase will
or may be executed after the authority terminates (either wholly or in part). The Company may complete such a purchase though
the authority has terminated. 
By order of the Board
Peter Chapman
Company Secretary Registered ofﬁce:
7-9 St Georges Square
London SW1V 2HX
17 October 2002
Notes:
1. A member of the Company entitled to attend and vote at the above meeting is entitled to appoint one or more proxies to attend and, on
a poll, vote instead of him. A proxy need not be a member of the Company. T o be valid, the form of proxy must reach the Company’s
registrars, Capita IRG Plc, Proxy Department, PO Box 25, Beckenham, Kent, BR3 3BR not less than 48 hours before the time appointed
for holding the meeting. Appointment of a proxy will not prevent a member from attending and voting at the Annual General Meeting.
2. Copies of the Directors’ service contracts are available for inspection at the Company’s registered ofﬁce during normal business hours
on any weekday (except public holidays) and at the place of meeting for 15 minutes prior to and during the Annual General Meeting.
Notice of Annual General Meeting continued Please insert
full name(s) and I/We ................................................................................................................................................................................................
address(es) in of ....................................................................................................................................................................................................
BLOCK CAPITALS ........................................................................................................................................................................................................
being a Member/Members of the above named Company hereby appoint *Lord T om Sawyer or..............................................................or, failing him,
the duly appointed Chairman of the meeting as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be
held on 26 November 2002 at 12.30pm and at any adjournment thereof.
Please indicate with an “X” in the boxes below how you wish your votes to be cast. 
No. Ordinary Resolutions For   Against
1. T o receive and adopt the Annual Report and Financial Statements
2. T o declare a dividend
3. T o elect Christa Echtle as a Director of the Company
4. T o elect Desmond Doyle as a Director of the Company
5. T o elect Lord T om Sawyer as Non-Executive Chairman of the Company
6. T o elect James Reed as a Non-Executive Director of the Company
7. T o elect Alan Dexter as a Non-Executive Director of the Company
8. T o elect Daphne Statham as a Non-Executive Director of the Company
9. T o re-appoint RSM Robson Rhodes as auditors of the Company and to 
authorise the Directors to determine their remuneration
10. T o authorise the Company to allot relevant securities
11. T o authorise the Directors to establish the Savings-Related Share Option Scheme as detailed in the 
Appendix to the letter to shareholders dated 17 October 2002 and further scheme or schemes 
Special Resolutions
12. T o disapply the statutory pre-emption rights contained in Section 89 Companies Act 1985
13. T o authorise the Company to make market purchases of Ordinary Shares 
Signature ............................................................................................          Dated this ...............................day of....................................................2002   
Number of Ordinary Shares held .......................................................          Number of “B” Ordinary Shares held ...........................................................
Notes:
If any other proxy is preferred, strike out the name *inserted above and add the name of the proxy you wish to appoint and initial the alteration. The proxy need not be a member of
the Company.
If the appointor is a corporation, this form must be under its common seal or under the hand of an ofﬁcer or attorney duly authorised in that behalf.
In the case of joint holders, the signature of any holder will be sufﬁcient but the names of all the joint holders must be stated.
If the form is returned without any indication as to how the person appointed proxy shall vote, he will exercise his discretion as to how he votes or whether he abstains from voting.
T o be valid, this form must be completed and deposited together with the power of attorney or other authority (if any) under which it is signed, or a notarially certiﬁed copy of such
power or authority, at the ofﬁces of the Registrars of the Company, Capita IRG plc, Bourne House, 34 Beckenham Road, Beckenham, Kent, BR3 4TU not less than forty-eight hours
before the time appointed for holding the meeting or adjourned meeting.
Completion and return of the form of proxy will not prevent members voting and attending in person.
Form of Proxy
Reed Health Group plc
✁ BUSINESS REPLY SERVICE
Licence No. MB122
1 1
Capita IRG plc
Proxy Department
Registrars of Reed Health Group plc
P .O. Box 25
Beckenham
Kent 
BR3 4BR
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