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Breaking Recruitment News - Healthcare Locums plc announces Final Results and 60million Placing

Breaking Recruitment News - Healthcare Locums plcannounces Final Results and &pound60million Placing

Healthcare Locums plc, a market leader in the supply of workforce solutions to the health and social care industriesin the UK and Australia, has announced its audited results for the year ended 31 December 2010.

Financial Summary

Consolidated Income Statement

2010

2009 1

(Restated)

&poundm

&poundm

Revenue

157.2

167.5

Gross Profit

41.2

50.4

Gross Profit %

26%

30%

Adjusted EBITDA *

(0.1)

15.6

Adjusted (loss) / profit from operations **

(2.9)

13.7

Highlighted items

Goodwill Impairment

(46.0)

-

Others (net) ***

(3.2)

(5.8)

(Loss) / profit from operations

(52.1)

7.8

Foreign exchange gains/(losses) (net)

1.5

-

Finance expense (net)

(5.9)

(2.0)

(Loss)/Profit before tax

(56.5)

5.9

Taxation

2.1

(2.8)

(Loss) / Profit for the year

(54.4)

3.1

Basic (loss)/earnings per share (pence)

(50.0)p

2.9p

 

*

Adjusted EBITDA is adjusted (loss)/profit from operations before depreciation of property, plant and equipment, amortisation of intangibles and share scheme charges.

**

Adjusted (loss) / profit from operations refers to (Loss) / Profit from operations before impairment of goodwill and other highlighted items as analysed in Note 5 to the Financial Statements

***

Other highlighted items are analysed in Note 5 to the Financial Statements.

1Restatements

The Board has restated the 2009 Financial Statements, as set out in Note 1.The impact of the Prior Year Adjustments on previously reported Net Equity may be summarised as follows:

31 Dec 2009

01 Jan 2009

&poundm

&poundm

Net equity as previously reported

67.2

56.1

Restatements for:

Accounting errors

(15.3)

(6.6)

Change in accounting policies

(4.0)

(0.9)

(19.3)

(7.5)

Tax effect of above

2.1

-

Net equity as restated

50.0

48.6

Further information is provided in Note 1 to the Financial Statements.

Market Challenges & the new Board's response

&sect HCL has a very experienced new Board and executive management team. Since the new Board and executive management team was formed in 2011, the business has been refocused and good progress has been made over recent months.

&sect Challenges faced have been considerable. The new Board has needed to extensively restate prior year figures, propose a significant refinancing of the Group to ensure future stability and importantly, re-engineer the UK business to meet the changing needs in the healthcare staffing market.

&sect Following these actions, the Board now believes that HCL is in a far stronger position to respond to the needs of its customers and grow sustainably over the long term.

UK & Australian businesses

&sect In the UK, HCL is a leading business, one capable of generating good levels of profit by delivering a high level of service on competitive terms to the NHS and private sector. The new executive team is committed to re-focusing the business, to address changing market dynamics.

&sect In Australia, the HCA business, which was acquired in December 2010 shortly before the financial year end, has continued to trade in line with expectations since its acquisition. The Board's goal is to build a broadly based specialist healthcare recruitment business in Australia, similar to HCL's position in the UK.

&sect Synergies can be achieved over time by owning both the UK and Australian healthcare recruitment businesses.

Proposed Refinancing & Trading on AIM

&sect The Board's priority remains to improve the Group's financial situation by reducing debt. The Board believes that the proposed Refinancing announced today is in the best interests of all shareholders.

&sect Toscafund has been very supportive of the company and its management, reflecting its positive view of the company's future prospects for growth

&sect Trading in the Company's shares is scheduled to resume consequent to shareholder approval of the proposed Refinancing.

Peter Sullivan, Chairman, said:

"The Group has faced considerable challenges and the complexity and extent of the challenges faced by the Company has meant that the process of producing these audited Financial Statements has taken considerably longer than initially expected. Nevertheless, the action taken by the Board has been vital in restoring stability and positioning the Group for sustainable growth in the future.

Despite its recent troubles, HCL remains fundamentally a good business. Furthermore, having announced a refinancing today, the Board believes that the Refinancing, if completed, will provide the Group with a strengthened balance sheet, a much lower level of debt, and additional cash funding for operational initiatives, thereby creating a viable, sustainable capital structure giving it the capability to achieve significant returns.

The Board and I are confident that HCL can grow again and prosper from here on."

Sullivan also announced a &pound60 million Placing and Open Offer of up to &pound4.25 million.

The Board of Healthcare Locums plc has announced a substantial refinancing of the Company designed to secure the Company's future by putting it on a solid financial footing and provide Healthcare Locums with the requisite cash and debt resources and capital structure to give it the capability to generate significant returns and enable trading in Ordinary Shares on AIM to be resumed. The refinancing comprises a &pound60 million Placing, an Open Offer of up to &pound4.25 million, the Debt for Equity Conversion and the Debt Repayment and Restructuring (together referred to as the "Refinancing"). The Board has also announced the publication of Healthcare Locums' audited Financial Statements for the year ended 31 December 2010.

The Placing, the Open Offer, the Debt for Equity Conversion and the Debt Repayment and Restructuring are all conditional upon the approval of the Shareholders at the General Meeting. The restoration of trading on AIM of the Ordinary Shares will take place upon and subject to completion of the Refinancing.

The Placing has been offered to a range of new and existing shareholders. In particular, as part of the Placing, Toscafund, an existing shareholder, that has been very supportive of the company and its management, reflecting its positive view of the company's future prospects for growth, has agreed to subscribe &pound33.6 million for 336,375,000 New Ordinary Shares and (separately from the Debt for Equity Conversion) ACE Limited has agreed to subscribe &pound13.16 million for 131,625,000 New Ordinary Shares. The issue of Placing Shares to both Toscafund and ACE Limited is conditional upon the Waiver being granted by the Takeover Panel becoming effective, which is in turn conditional upon the approval of the Independent Shareholders at the General Meeting voting on a poll.

In the event that the Refinancing Resolutions are not passed at the General Meeting and the Refinancing is not implemented, then the Group will be unable to satisfy its existing financial covenants and/or service its existing borrowings or meet its ongoing funding requirements without further support from the Lenders. In such event, the Group would be in default under the Existing Facilities. Such a default under the Existing Facilities, in addition to any default which may subsist due to misrepresentations made under the terms of the Existing Facilities at the time they were entered into, would entitle the Lenders to demand repayment of the Existing Facilities. Further, if the Refinancing does not proceed, the Banks have informed the Company that they will only continue to support the business on the basis that a sale of all or part of the Group is pursued. This would be likely to involve formal insolvency proceedings for all or part of the Group. This would, in the Board's opinion, result in Shareholders receiving no value for their current shareholdings.

Commenting on the refinancing, Peter Sullivan, Chairman of Healthcare Locums, said:"We are pleased to have achieved this refinancing in such difficult markets. The Board has considered a range of alternatives that would deliver the optimum value for stakeholders and revise the company's current capital structure to allow a strengthened business to move forward. The Board believes that the refinancing, if completed will provide the Group with a strengthened balance sheet and additional cash funding for operational initiatives, thereby creating a viable, sustainable capital structure giving it the capability to achieve significant returns."

The information set out below in this announcement has been extracted from the circular dated 19 August 2011 which is to be sent to shareholders today (the "Circular"), a copy of which will be available on the Company's website, www.healthcarelocums.com shortly.

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