RNS Number:2337R
Reed Health Group PLC
11 February 2002
11 February 2002
Reed Health Group plc
("Reed Health Group" or the "Company")
Interim Results for the 26 weeks ended 30 December 2001
Reed Health Group plc, a provider of healthcare staffing services to the public
and private sectors in the UK, announces its unaudited interim results for the
26 weeks ended 30 December 2001.
Highlights
• Successful demerger from Reed Executive PLC in July 2001
• Group turnover increased by 17.8% to £37.9m (2000: £32.2m)
• Reed Social Care
- Turnover increased by 13% to £14.7m
- Expansion into specialist areas
- Widening client base
• Reed Nurse
- Turnover up by 15% to £16.6m
- Extension of existing contracts
- Move into consultancy services
• Reed Health Professionals
- Turnover increased by 40% to £6.6m
- Increase in long-term permanent placements
- New areas - optometry and pharmacy
• Appointment of Desmond Doyle as Group Finance Director in November
2001
• Maiden interim dividend of 0.66p per share
• Board pleased by current trading performance despite increase in
central costs as a consequence of being an independent company
Christa Echtle, Chief Executive of Reed Health Group, said:
"The Board believes that Reed Health Group remains well placed in its markets to
continue to grow its turnover, despite the potential impact of NHS Professionals
and LAP on Reed Nurse. The diversification of the Company's service offering,
combined with market growth and continuing public/private partnership will allow
the Company to continue to take advantage of the opportunities which exist in
its markets. Reed Health Group continues to tender for and win contracts of
varying sizes and the Board is pleased with the Company's current trading
performance".
- ends -
For further information, please contact:
Reed Health Group plc 020 7834 3181
Christa Echtle, Chief Executive
Desmond Doyle, Finance Director
Weber Shandwick Square Mile 020 7950 2800
Louise Robson or Graham Herring
Reed Health Group plc
("Reed Health Group" or the "Company")
Interim Results for the 26 weeks ended 30 December 2001
CHIEF EXECUTIVE'S STATEMENT
I am pleased to announce Reed Health Group plc's first set of interim results as
an independent company following the demerger from Reed Executive PLC in July
2001. These interim results demonstrate the continuing growth of the Company's
business.
Financial Results
Turnover for the 26 week period to 30 December 2001 increased by 17.7% to £37.9m
compared with £32.2m for the 26 weeks to 29 December 2000. Operating profit,
before demerger costs, was £2.3m, compared with £2.4m for the comparative
period. The reduction in operating profit before demerger costs was principally
due to the Company incurring higher central costs as a consequence of being an
independent listed company. Pre-tax profit, after demerger costs of £156,000,
was £2.2m (2000: £2.4m). Earnings per share, excluding demerger costs, were
3.61p. As at 30 December 2001, Reed Health Group had net cash of £4.4m.
The Board is declaring an interim dividend of 0.66p per share payable on 28
March 2002 to shareholders on the register on 22 February 2002.
Review of Operations
Reed Social Care
During the period Reed Social Care operated from 10 branches in England and
Wales and filled over 855,000 hours. Turnover for Reed Social Care increased
13.1% to £14.7 million, compared to £13.0 million for the comparative period.
Reed Social Care provides social care workers across a wide range of services
such as childcare, mental health, residential care, community support and caring
for the elderly.
During the period Reed Social Care continued to tender successfully for contract
business and service level agreements with local authorities and won new
supplier status with a number of local authorities.
Reed Social Care has expanded certain specialist niche areas, such as an
innovative programme for respite care in adult disability services and bespoke
childcare contracts. At the same time Reed Social Care has increased and widened
its client base across Social Services and the voluntary sectors. The Directors
believe that there is opportunity for Reed Social Care to enter into additional
specialist niche areas and intend to look at opportunities to do so in the
future.
The Directors believe that the outlook for Reed Social Care's market remains
strong and market opportunities exist to provide new and innovative services for
clients.
Reed Nurse
Reed Nurse specialises in the provision of both qualified and unqualified nurses
on a temporary basis to health sector organisations, primarily NHS Trusts.
Turnover in this division for the 26 weeks to 30 December 2001 grew by 15.3% to
£16.6m compared to £14.4m for the same period last year. During the period,
Reed Nurse operated from 15 branches and filled over 840,000 hours.
The NHS is currently undergoing change. The Board continues to believe in the
concept of public/private partnership in the NHS and believes that the Company's
ability to deliver quality services to patients continues to improve.
In July 2001, Reed Nurse was approved to supply specialist nurses to London NHS
hospitals under the London Agency Project ("LAP"). LAP was set up with the
intention of creating a central body responsible for drawing up a framework for
contracts between London based NHS Trusts and staffing agencies to supply
specialist temporary nurses. LAP came into effect in September 2001 and to date
has had no material impact on Reed Nurse. Instead, LAP has given Reed Nurse the
opportunity to enter into service negotiations with a number of new NHS clients.
During the period, Reed Nurse continued to bid for a number of new contracts and
is in discussions with a number of NHS Trusts.
The Company invested in and improved its central call centre, which opened in
May 2001. This call centre is now handling more clients and more calls than
originally expected and is an efficient way to work and fulfil Reed Nurse's
clients' needs. The Board is looking at ways to increase the Company's
capabilities in this area further, with the possibility of expanding across the
other divisions.
During the period Reed Nurse undertook consultancy work with three NHS Trusts
and was able to improve the Trusts' in-house recruitment and retention systems.
This consultancy work has opened up possibilities of partnership arrangements
with the NHS, which the Directors intend to explore in the coming period.
In April 2001, the Government launched the first phase of "NHS Professionals",
the nurse bank management scheme operated by NHS Trusts. This initiative is
likely to have an impact on the way all nursing agencies work, especially those
that have been managing large scale NHS contracts for the supply of temporary
nurses. It is expected that in the future Reed Nurse's focus will shift from
managing full scale contracts for the NHS to working with NHS Professionals on a
bespoke or ad hoc basis.
NHS Professionals has not materially affected the Company's business but the
full details and future implications of this initiative are as yet to be
determined. In any event, the Board believes that the Company is well placed to
respond to the Government's aim of improving the NHS standards and welcomes any
initiative that allows nurses more flexible access to work.
Reed Health Professionals
Reed Health Professionals, which operates from 3 branches, has increased
turnover by 39.9% to £6.6m, compared with £4.7m for the same period last year.
The number of hours filled was over 270,000. Reed Health Professionals supplies
qualified health professionals, on a temporary basis, principally to NHS Trusts.
Reed Health Professionals' business has shown continuous growth, in particular,
the division increased the number of permanent placements made.
Recently developed niche areas are making encouraging progress, in particular
optometry and pharmacy recruitment. A supply agreement has been signed with
Boots, the High Street chain. Reed Health Professionals is considering
expanding into further niche areas, such as radiography.
The Board believes that favourable trading conditions will prevail in this
division for the foreseeable future.
Employees
Desmond Doyle joined the company as Group Finance Director in November. With
both UK and US listed company experience he has brought strong financial and
commercial focus to the Company and the Board is confident that he will make a
significant contribution to the success of the business.
The first six months have demonstrated the Company's ability to operate
satisfactorily as a separate listed company. The Board would like to thank all
the Company's staff for their dedication, commitment and energy particularly
during this period.
Group Strategy
Reed Health Group will continue to focus on the supply of personnel and related
services to the health and care markets. This focus has been assisted by the
demerger from Reed Executive, which has given the Company the flexibility to
finance its organic growth and to make appropriate acquisitions. The Board now
believes that the Company is well placed to pursue opportunities for growth in
the health and care markets.
The Directors believe that the ability to offer integrated services across
recruitment, related HR services and direct services will become increasingly
important to the Company's clients.
Current Trading and Prospects
As a result of the demerger, central costs have necessarily increased to reflect
the Company's independent status as a public company.
The Board believes that Reed Health Group remains well placed in its markets to
continue to grow its turnover, despite the potential impact of NHS Professionals
and LAP on Reed Nurse. The diversification of the Company's service offering,
combined with market growth and continuing public/private partnership, will
allow the Company to continue to take advantage of the opportunities which exist
in its markets. Reed Health Group continues to tender for and win contracts,
and the Board is pleased with the Company's current trading performance.
Christa Echtle
Chief Executive
For further information, please contact:
Reed Health Group plc 020 7834 3181
Christa Echtle, Chief Executive
Desmond Doyle, Finance Director
Weber Shandwick Square Mile 020 7950 2800
Louise Robson or Graham Herring
Reed Health Group plc
Summarised Consolidated Profit and Loss Account
Unaudited Unaudited Unaudited
26 weeks to 26 weeks to 52 weeks to
30 December 29 December 1 July
2001 2000 2001
Notes £'000 £'000 £'000
Turnover - continuing activities 2 37,884 32,170 66,776
Direct costs (31,100) (26,339) (55,509)
________ ________ ________
Gross profit 6,784 5,831 11,267
Administrative expenses (4,625) (3,424) (6,884)
________ ________ ________
Operating profit - continuing activities
Before exceptional item 2,315 2,407 4,383
Exceptional item 3 (156) - -
After exceptional item 2,159 2,407 4,383
Net interest receivable/(payable) 22 (20) (45)
________ ________ ________
Profit on ordinary activities before taxation 2,181 2,387 4,338
Taxation 4 (672) (740) (1,344)
________ ________ ________
Profit for the period 1,509 1,647 2,994
Dividend / contribution to group 5 (295) (1,647) (2,779)
________ ________ ________
Retained profit for the period 1,214 - 215
________ ________ ________
Earnings per share
- basic pre-exceptional items 6 3.61p 3.68p 6.69p
- basic 6 3.37p 3.68p 6.69p
- diluted 6 3.35p 3.68p 6.69p
Dividend per share 0.66p nil nil
Statement of Total Recognised Gains and Losses
There were no recognised gains and losses in the period, or in the prior periods shown, other than the results
shown above.
Reed Health Group plc
Summarised Consolidated Balance Sheet
Unaudited Unaudited Unaudited
30 December 29 December 1 July
2001 2000 2001
£'000 £'000 £'000
Tangible Fixed Assets 770 346 438
________ ________ ________
Current Assets
Debtors 11,924 8,544 10,934
Cash at bank and in hand 4,411 - 296
________ ________ ________
16,335 8,544 11,230
Creditors: amounts falling due within one year (8,458) (4,828) (4,238)
________ ________ ________
Net current assets 7,877 3,716 6,992
________ ________ ________
Total assets less current liabilities 8,647 4,062 7,430
Provision for liabilities and charges (6) (2) (3)
________ ________ ________
Net assets 8,641 4,060 7,427
________ ________ ________
Equity shareholders' funds 8,641 4,060 7,427
________ ________ ________
Reed Health Group plc
Summarised Consolidated Cash Flow Statement
Unaudited Unaudited Unaudited
26 weeks to 26 weeks to 52 weeks to
30 December 29 December 1 July
2001 2000 2001
£'000 £'000 £'000
Net cash inflow from operating activities 4,876 2,045 1,910
Returns on investment and servicing of finance 22 (20) (45)
Taxation paid (369) (1,156) (2,530)
Capital expenditure and financial investment (414) (147) (337)
Equity dividend paid/contribution to group - (1,647) (2,779)
Financing - contribution from group - 925 4,077
________ ________ ________
Increase in cash during the period 4,115 - 296
________ ________ ________
Reconciliation of operating profit to net cash inflow
Unaudited Unaudited Unaudited
26 weeks to 26 weeks to 52 weeks to
30 December 29 December 1 July
2001 2000 2001
£'000 £'000 £'000
Operating profit 2,159 2,407 4,383
Depreciation of tangible fixed assets 82 72 108
Increase in debtors (990) (2,632) (5,022)
Increase in creditors 3,625 2,198 2,441
________ ________ ________
Net cash inflow from operating activities 4,876 2,045 1,910
________ ________ ________
Reconciliation of net cash flow to movement
in net funds
Unaudited Unaudited Unaudited
26 weeks to 26 weeks to 52 weeks to
30 December 29 December 1 July
2001 2000 2001
£'000 £'000 £'000
Increase in cash in the period 4,115 - 296
Net funds at start of period 296 - -
________ ________ ________
Net funds at end of period 4,411 - 296
________ ________ ________
Reed Health Group plc
Notes to the interim accounts
1. Basis of preparation
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 FRS 6 "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 Executives' health
activities with effect from 11 May 2001. The health activities included both
subsidiary companies and certain unincorporated business activities of Reed
Executive, which were themselves subject to reorganisation prior to transfer.
Reed Health Limited and its subsidiaries were 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.
2. Turnover
The turnover for the Group is derived in the UK.
3. Exceptional item
26 weeks to 26 weeks to 52 weeks to
30 December 2001 29 December 2000 1 July 2001
£'000 £'000 £'000
The profit on ordinary activities before taxation is stated
after charging the following exceptional item:
Costs in connection with the demerger of 156 - -
the Group
________ ________ ________
4. Taxation
UK corporation tax 669 738 1,341
Deferred tax 3 2 3
________ ________ ________
Taxation 672 740 1,344
========= ========= =========
5. Dividends
The interim dividend of 0.66p per share will be paid on 28 March 2002 to
ordinary and 'B' ordinary shareholders on the register on 22 February 2002.
The comparative figures reflect the profits absorbed by Reed Executive PLC as
contributions to/from the group in the periods prior to demerger.
6. Earnings per share
26 weeks to 26 weeks to 52 weeks to
30 December 2001 29 December 2000 1 July 2001
£'000 £'000 £'000
These have been
calculated on earnings
of:
- earnings per accounts 1,509 1,647 2,994
- earnings pre-exceptional item 1,617 1,647 2,994
________ ________ ________
Number of Number of Number of
shares shares shares
The weighted average number of shares used
was:
Shares in issue (* restated for merger 44,733,579 44,733,579* 44,733,579*
accounting)
Share option adjustment 255,754 - -
________ ________ ________
For diluted earnings per share 44,989,333 44,733,579 44,733,579
========= ========= =========
7. Reconciliation of movements in shareholders' funds
26 weeks to 26 weeks to 52 weeks to
30 December 2001 29 December 2000 1 July 2001
£'000 £'000 £'000
Total recognised gains relating 1,509 1,647 2,994
to the period
Dividend/contribution to group (295) (1,647) (2,779)
Increase in invested capital - 925 4,077
________ ________ ________
Net addition to shareholders' 1,214 925 4,292
funds
Opening shareholders' funds 7,427 3,135 3,135
________ ________ ________
Closing shareholders' funds 8,641 4,060 7,427
======== ======== ========
8. Interim report
The interim report was approved by the Board on 11 February 2002.
The interim accounts have been prepared using accounting policies that are
consistent with those adopted in the listing particulars relating to the
admission of the issued share capital of Reed Health Group plc to the Official
List of the UK Listing Authority and to trading on the London Stock Exchange
and which are to be adopted in the preparation of the year end statutory
accounts. Full provision for deferred taxation has been made in accordance
with the principles of FRS19 "Deferred Taxation" for all periods shown in these
accounts.
The interim report will be posted to shareholders and copies will be available
in due course from the Company's Registered Office: 7-9 St George's Square,
Pimlico, London, SW1V 2HX
END
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