RHG Real Hotel Grp

RNS Number:6706C
Reed Health Group PLC
07 September 2004


                                                                7 September 2004


                             Reed Health Group plc

                         ("Reed Health" or the "Group")


                                 Trading update

Reed Health, a provider of staffing services in the Health, Social Care and
Education sectors, is providing an update on trading ahead of its preliminary
results for the year ended 30 June 2004, which will be announced on Thursday 7
October 2004.

As a consequence of increased one-off costs of compliance and regulation within
the core nursing division and the implementation of a single new IT platform,
which is expected to yield significant savings going forward, the Group's
operating profit for the year ended 30 June 2004 will be materially below
current market expectations.

Turnover for the year will be slightly below expectations.  However, as the
Group has continued to focus on higher margin business, the gross margin
percentage will be no less than in the year ended 30 June 2003.

As indicated at the interim results, PASA, the NHS Purchasing and Supply Agency,
is requiring a significant number of compliance checks to be performed on
nursing staff to be supplied by agencies.  As a result, the division has been
impacted by an estimated #1 million during the period.  Although some costs
associated with maintaining compliance will continue this year, we believe that
more training and assessments for nurses will benefit us in the future as these
new requirements form a major barrier to new entrants and to existing small
players.

As part of a major cost reduction programme implemented over the past six months
the Group has migrated to a single new IT platform, which is already delivering
significant savings. The implementation of the new IT system, however, has
resulted in a one off implementation cost of approximately #0.5 million.

During the year, the Group continued to invest in the business by opening
thirteen new branches in total.  This has impacted results for the full year as
well as the first half as had been anticipated.  The Board intends to invest in
two new branch openings in the current financial year.

Looking forward, the Group will continue to focus on securing higher margin
business and delivering reduced operating costs in the current financial year.
Trading is currently in line with the Board's revised expectations.


                                    - Ends -



Enquiries:

Reed Health Group plc                           020 7845 4700
David Fennell, Chief Executive
Mark Garratt, Finance Director


Weber Shandwick Square Mile                     020 7067 0700
Louise Robson or Susanne Walker



                      This information is provided by RNS
            The company news service from the London Stock Exchange

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