28th Sep 2007 07:03
Company Health Group PLC28 September 2007 For release at 07.00h 28 September 2007 COMPANY HEALTH GROUP PLC ("Company Health" or "the Group") INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 Company Health Group plc (AIM: CHT), an established provider of healthcareservices including occupational health, ergonomics, recruitment, physiotherapyand medical evidence collection and testing for financial service companiestoday announces interim results for the six months ended 30 June 2007. Highlights: •Turnover almost doubled to £4.16 million (2006: £2.26 million) •Gross profit up to £1.56 million (2006: £0.98 million) •Profit before tax more than doubled to £123,000 (2006: £56,000) •Full six months contribution from Cheviot Recruitment and Cheviot Artus Skipton •Appointment of new Chief Executive - George Gonzalez, formerly Finance Director •Significant expansion of geographical coverage resulting in enhanced ability to tender for national contracts •New option schemes put in place - at exercise prices above the current share price - to incentivise management and staff •Admission to PLUS Markets to help improve liquidity for shareholders Commenting on the results Ralph Gough, Chairman, said: "I am pleased to report on a period of excellent progress for Company HealthGroup. We have spent the period of six months under review consolidating ouracquisitions made at the end of 2006 and extending our client base. Theseinterim results include a full six months of contribution from CheviotRecruitment and Cheviot Artus Skipton, our acquisitions of December 2006. Thesuccessful integration of these two complementary businesses is evidence of thesuccess of our strategy for growth which we believe will deliver substantiallyincreased revenues and profitability and thus shareholder value." For further information please contact: Ralph Gough, Chairman Simon Hudson / Clemmie CarrCompany Health Group Tavistock CommunicationsTel: 020 7553 8820 Tel: 020 7920 3150 Jim McGeeverH B CorporateTel: 020 7510 8600 CHAIRMAN'S STATEMENT I am pleased to report on a period of excellent progress for Company HealthGroup. We have spent the period of six months under review consolidating ouracquisitions made at the end of 2006 and extending our client base. Theseinterim results include a full six months of contribution from CheviotRecruitment and Cheviot Artus Skipton our two acquisitions of December 2006. Thesuccessful integration of these two complementary businesses is evidence of ouroutlined strategy for growth delivering shareholder value with substantiallyincreased revenues and profitability FINANCIAL OVERVIEW Turnover in the period was £4.16 million (2006: £2.26 million). This substantiallift on the equivalent figure for last year's interim results reflects bothorganic growth of the existing Group companies as well as the impact that theCheviot acquisition has had on the business. Gross profit was £1.56 million(2006: £0.98 million); profit on ordinary activities before taxations was £0.12million (2006: £56,000). Retained profit after tax was £118,000 (2006: £56,000).Earning per share improved to 0.25 pence (2006: 0.14 pence) despite asignificant increase in the number of shares in issue. Net assets rose to £4.8 million (2006: £3.9 million) following the recentacquisitions. The Group's bank facilities were renewed in February comprising athree-year loan of £0.375 million and an overdraft facility of £0.35 million.The Group also acquired an invoice discounting facility for Cheviot Recruitment,which had a balance at £0.221 million at the 30 June 2007. The reserve for theCheviot earn out was reduced to £0.86 million at the 30 June 2007. In April this year two redeemable convertible loan notes were issued, the firstfor £0.6 million due at the end of October 2007 and the second for £0.3 milliondue at the end of December 2007 to fund the Cheviot acquisition. In June 2007the earn out due in respect of the Milligan & Hill acquisition of £0.67 millionwas satisfied by a payment of £0.23 million cash and the issue of 6,579,044shares at 6.6p. At the same time we raised £0.53 million with a placing of9,545,455 shares in the market. During the coming months it is the Board's intention to raise additional fundsthrough the issue of equity and debt. This financing will be used to cover thedeferred consideration for the Cheviot acquisitions. It will also providefurther acquisition capital. The Board are confident of achieving the fundingand will make appropriate announcements in due course. DIVIDEND It is the Board's intention to follow a progressive dividend policy as soon aspracticable. As Company Health is still in its growth phase and we have anaggressive acquisition strategy to complete this growth, we are not declaring adividend at this time. OPERATING REVIEW The Group has performed well in the past six months with significant increasesin sales and additions to our customer portfolio. We have consolidated ourposition in the North with the successful development of our Gateshead office atTeam Valley. We have recently opened a new office in Andover, continuing oureffort to extend our national coverage. Also during the period the Company became listed on London's PLUS Markets. PLUS is an independent London-based equity market service, provided by PLUS Markets Group plc, based on a quote-driven trading system. Company Health continues to be AIM quoted and traded but the PLUS Markets facility is intended to enhance investor choice, improve liquidity for shareholders and provide greater access to investors. OCCUPATIONAL HEALTH Company Health our occupational health business has continued to grow stronglythis year. We have seen an increase in demand for services as more and moreemployees seek out occupational health services. We have seen an excellentcontract retention rate of 98% and new contracts are continuing to be won. Anumber of exiting opportunities are in the tender process and as our UK coveragegrows we anticipate receiving more tenders for contracts. Thanks to our Cheviotacquisitions we now have a greater national reach and a database of occupationalhealth specialists that we can call upon. This enhanced functionality nowenables us to apply for large tenders, which previously would have been beyondour scope. We remain focussed upon a consistent acquisition policy to improve our coveragewithin the UK and substantially increase our market share. PHYSIOTHERAPY, ERGONOMICS AND SPORTS INJURY Despite the real progress made operationally by Milligan & Hill (M&H) in thefirst half, increased costs from the doubling up of senior management during thehandover from the vendors, together with reduced margins in respect of onesignificant client company caused a dip in the contribution to the Group.Lindsay Flower, Milligan & Hill's (M&H) new Clinical Services Director has grownthe business with some important new blue chip customer wins in the City ofLondon whilst also adding to the business's occupational health offering. M&Hhas also successfully enlarged the sports injury practice, a vital area ofbusiness in a locality dominated by office workers with keen sports interests.More particularly, the M&H ergonomics offering has been significantly broadened.M&H uses a software programme called ErgoPro which identifies workplaceinefficiencies and problems, whilst also demonstrating how environmental designcan enhance health and prevent injuries such as eye strain and back ache. COLLECTION OF MEDICAL INFORMATION FOR THE LIFE ASSURANCE MARKET Company Health Group's Diagnostic Technologies has had another pleasing sixmonths of performance. The paramedic examinations service is doing well, withthe inclusion of its new electronic pen for the electronic transfer of apatient's information as soon as it is acquired. CURRENT TRADING AND OUTLOOK The second half of this year continues well. We remain on the look out forsuitable acquisitions to continue the Group's growth strategy and build on ourgeographic coverage. Post-period end we announced the appointment of GeorgeGonzalez as our new Chief Executive. George has worked with the Company for anumber of years as Finance Director and knows the business well. I am delightedby George's appointment and am looking forward to working with him on a morestrategic level in the coming months. In addition to this we have been furthering our drive to maintain momentum inbuilding our customer base through organic growth, with the provision of new ormore services to existing customers as well as acquiring new customers throughtenders. We are operating in a market where ever increasing focus on health andsafety issues and the regulation of these issues only supports and furthers theGroup's growth potential and it is for these reasons that I am optimistic aboutour growth prospects as the year progresses. Finally, I am pleased to announce the introduction of an employee share optionscheme under the Enterprise Management Incentive (EMI) rules to provide theability to attract, retain and motivate staff and management. Under this scheme,options on a total of 402,143 ordinary shares are being issued to all employeeswith over one year's service at an exercise price of 7.5 pence and areexercisable after three years of continuous service. In addition, theRemuneration Committee has awarded options on 3,050,000 ordinary shares to keymanagement - half at an exercise price of 7.5 pence and half at an exerciseprice of 10 pence. I look forward to a positive outcome for the rest of the year and to achievingour full year expectations. We are maintaining the growth in revenues we haveseen this half. We have a comprehensive management team in place and with thefull integration of the Cheviot brands we bring renewed vigour to ourdevelopment of Company Health Group. RALPH GOUGH Chairman 27 September 2007 Consolidated income statementfor the six months ended 30 June 2007 6 months to June 2006 Period to 6 months to (unaudited Dec 2006 June 2007 as - Notes (unaudited) restated) (audited) £'000 £'000 £'000 ------ --------- --------- --------Turnover 2 4,155 2,260 4,350 Cost of sales (2,591) (1,279) (2,331) ------ --------- --------- --------Gross profit 1,564 981 2,019Operating expenses (1,389) (899) (1,841) ------ --------- --------- --------Operating profit 175 82 178Net interest payable (52) (26) (58) ------ --------- --------- --------Profit / (loss) on ordinaryactivities before taxation 123 56 120Taxation 3 (5) - 1 ------ --------- --------- --------Profit for the period 118 56 121 ------ --------- --------- --------Earnings per share (pence)- basic 4 0.25 0.15 0.28- diluted 4 0.22 0.11 0.24 ------ --------- --------- -------- There are no recognised gains or losses other than those stated in the aboveprofit and loss accounts. Consolidated balance sheetas at 30 June 2007 As at As at As at 30 June 30 June 31 Dec 2007 2006 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 --------- --------- --------Non-current assetsIntangible assets 6,465 3,983 6,968Property, plant and equipment 259 170 247 --------- --------- --------Total non-current assets 6,724 4,153 7,215 --------- --------- -------- Current assetsInventories 100 88 125Trade and other receivables 1,722 967 1,193Cash and cash equivalents 849 1,059 356 --------- --------- --------Total current assets 2,671 2,114 1,674 --------- --------- -------- Current liabilitiesBorrowings (1,927) (1,500) (1,119)Trade and other payables (1,632) (623) (1,954)Corporation tax liabilities (18) (50) (25) --------- --------- --------Total current liabilities (3,577) (2,173) (3,098) --------- --------- -------- Net current (liabilities)/assets (906) (59) (1,424) --------- --------- --------Total assets less current liabilities 5,818 4,094 5,791 --------- --------- -------- Non current liabilitiesBorrowings (132) (161) (94)Other non-current liabilities (852) (2) (1,480) --------- --------- --------Total non-current liabilities (984) (163) (1,574) --------- --------- -------- Net assets 4,834 3,931 4,217 --------- --------- --------EquityCalled up share capital 628 371 467Share premium account 3,339 1,944 2,567Shares to be issued - 933 434Retained earnings 867 683 749 --------- --------- --------Total equity 4,834 3,931 4,217 --------- --------- -------- Consolidated cash flow statementfor the six months ended 30 June 2007 6 months to 6 months to June 2006 Period to June 2007 (unaudited Dec 2006 - as (audited) (unaudited) restated) £'000 £'000 £'000 --------- -------- --------Cash generated from operating activitiesNet cash outflow from operating activities (23) (1) 481Interest paid (23) (22) (51)Corporation tax paid (12) - (34) --------- -------- -------- (35) (22) (85) --------- -------- --------Net cash flow from operating activities (58) (23) 396Purchase of intangible fixed assets (134) - (24)Purchase of plant, property and equipment (30) (37) (96)Acquisition of subsidiary undertakings - - (151)Net debt acquired with subsidiary undertaking - - (217)Interest received - 1 1 --------- -------- --------Net cash outflow from investing activities (164) (36) (487) --------- -------- -------- (222) (59) (91) --------- -------- --------Cash flows from financing activitiesRepayment of borrowings (68) (286) (359)New loan finance received 405 - -Placing of ordinary shares 499 - -Payment of finance lease obligations (6) (31) (36) --------- -------- --------Net cash flow from financing activities 830 (317) (395) --------- -------- --------Net (increase)/decrease in cash and cash 608 (376) (486)equivalentsCash and cash equivalents at 1 January 2007 (370) 116 116 --------- -------- --------Cash and cash equivalents at 30 June 2007 238 (260) (370) --------- -------- --------Reconciliation of operating profit to netcash inflow / (outflow) from operating activities Operating profit 175 82 178Depreciation 18 21 44Amortisation of intangibles 10 7 13(Increase) / decrease in inventories 25 (44) (31)Decrease / (increase) in trade and other receivables (529) (210) (37)Increase / (decrease) in trade and other payables 278 143 314 --------- -------- --------Net cash inflow / (outflow) from operating activities (23) (1) 481 --------- -------- -------- Consolidated statement of changes in shareholders' equityfor the six months ended 30 June 2007 Shares Share Share to be Retained Total capital premium issued Earnings Equity £'000 £'000 £'000 £'000 £'000 ------ -------- ------- ------- ------At 1 January 2007 467 2,567 434 749 4,217 Profit from the period from the income statement - - - 118 118Issue of completion shares on acquisition of subsidiary 65 369 (434) - - Issue of shares - placing 96 403 - - 499 ------ -------- ------- ------- ------At 30 June 2007 628 3,339 - 867 4,834 ------ -------- ------- ------- ------ For the six months ended 30 June 2006 Shares Share Share to be Retained Total capital premium issued Earnings Equity £'000 £'000 £'000 £'000 £'000 ------ -------- ------- ------- ------At 1 January 2006 371 1,944 933 627 3,875 ------ -------- ------- ------- ------ Profit for the period from the income statement - - - 56 56 ------ -------- ------- ------- ------At 30 June 2006 371 1,944 933 683 3,931 ------ -------- ------- ------- ------ For the 12 months ended 31 December 2006 Shares Share Share to be Retained Total capital premium issued Earnings Equity £'000 £'000 £'000 £'000 £'000 ------ -------- ------- ------- ------At 1 January 2006 371 1,944 933 627 3,875 Profit for the period from the income statement - - - 122 122Issue of shares on acquisition of subsidiary 96 623 (719) - - ------ -------- ------- ------- ------ Shares to be issued on acquisition of subsidiary - - 220 - 220 ------ -------- ------- ------- ------At 31 December 2006 467 2,567 434 749 4,217 ------ -------- ------- ------- ------ Notes 1. Accounting policies The Group's interim report has been prepared in accordance with IFRS and thecomparative 2006 half yearly figures have been restated on the same basis. Thesame accounting policies have been used in this report as adopted by the Groupin its last consolidated financial statements for the year ended 31 December2006. The results for the 2007 and 2006 half years are unaudited. The 2006 fullyear results have been derived from the 2006 financial statements. The 6,579,045 New Ordinary Shares relating to the Milligan & Hill Ltd earn-outwere issued on 26 June 2007 but were not admitted to trading on AIM until 2 July2007. For the purposes of this report, these completion shares have beenincluded in the June 2007 figures and the calculation of earnings per share hasbeen adjusted accordingly. 2. Segmental information 6 months to 6 months to June 2006 Year to June 2007 (unaudited - Dec 2006 (unaudited) as restated) (audited) £'000 £'000 £'000 ---------- ---------- --------RevenueInsurance Medicals 1,092 886 1,675Occupational Health 1,366 899 1,769Recruitment 1,290 - -Physiotherapy 407 475 906 ---------- ---------- -------- 4,155 2,260 4,350 ---------- ---------- -------- Operating ProfitInsurance Medicals 163 145 284Occupational Health 11 (18) (28)Recruitment 109 - -Physiotherapy 20 80 135Central costs (128) (125) (213) ---------- ---------- -------- 175 82 178 ---------- ---------- -------- 3. Taxation An estimate has been made of the appropriate rate of taxation for the six monthsto 30 June 2007 of £5,000 (2006: £nil). 4. Earnings per share The calculation of basic earnings per share is based on the profit for the sixmonths ended 30 June 2007 of £118,000 (2006: £56,000) divided by the weightedaverage of ordinary shares in issue for the six months ended 30 June 2007 of47,159,493 (2006: 39,245,762). This results in a basic earnings per share of0.25p (2006: 0.14p). The calculation of diluted earnings per share is based on the profit for the sixmonths ended 30 June 2007 of £118,000 (2006: £56,000) divided by the weightedaverage of ordinary shares in issue for the six months ended 30 June 2007 of54,196,629 (2006: 50,579,940). This results in a diluted earnings per share of0.22p (2006: 0.11p). 5. Copies of report Paper copies of the interim statement will be sent to shareholders upon request.Otherwise, shareholders will be able to download a copy from the Group's websitewww.companyhealthgroup.com. Further copies will be available from the CompanySecretary, Peter Ashcroft, at Company Health Group plc, 309 New Loom House, 101Back Church Lane, London E1 1LU. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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