Acquisition of JCJ by peirongw


									23 April 2007 Healthcare Locums plc (“HCL” or “the Company”) Acquisition of JCJ Locums Ltd Renegotiation of Banking Arrangements

Healthcare Locums plc today announces that it has acquired the business and assets of JCJ Locums Ltd (“JCJ”), from PRG Group plc, for a total consideration of £5.5m, to be satisfied in cash. JCJ specialises in the recruitment of locum junior and middle grade doctors in the UK and in the year to 31 December 2006 generated revenues of £26m and pre-exceptional EBITA of £1m*. The Board of HCL believe that JCJ has been acquired at a very attractive multiple and it is expected to provide visible synergies in addition to being earnings enhancing in the current financial year. This acquisition significantly bolsters HCL‟s position within the junior and middle grade doctors‟ recruitment sector. It also adds further strength to the Group‟s business portfolio which is currently 40% with NHS clients and 60% with private, international, local authority and MOD contracts. JCJ will benefit from HCL‟s strong position in the private sector healthcare market, its permanent placement division and International contracts. JCJ Locums will be integrated with HCL‟s regional call centre in Skipton, and its back office function immediately integrated into HCL‟s major Loughton call centre. JCJ has been one of the fastest growing medical staffing businesses in the UK. Sales growth in 2006 was 30% higher than the previous year and EBITA growth in the same period was 44%*. Specialising in the provision of junior and middle grade doctors, JCJ has benefited from the National Framework Agreement (NFA) and has been successful in winning significant contracts. The number of medical staffing agencies now on the NFA has fallen from 39 to 25, leading the Board to believe that more business is now available to fewer companies. HCL now owns 3 of these 25 agencies and this acquisition makes HCL the largest medical staffing agency in the UK. It is the Board‟s view that this earnings enhancing acquisition marks the end of the Group‟s acquisition strategy. Going forward HCL will focus on the integration of these businesses and concentrate on enhancing organic growth during 2007 and onwards. The company‟s three operating divisions – Doctors, Allied Health Professionals and Social Workers – now all enjoy market leading positions in these specialist fields. Current trading is strong. Prior to the acquisition of JCJ, HCL‟s revenue run-rate is in excess of £111m on an annualised basis and following the acquisition, will increase to £141m on an annualised basis. Gross margins are now running at over 24% of sales (2005: 23%). Excluding acquisitions made, gross margin in 2006 was £11.8m (2005: £10.1m) showing strong organic growth of over 16%.

Renegotiation of Banking arrangements As a result of the acquisition, we are delighted to announce that HCL‟s current bankers Barclays have been joined by Allied Irish Banks as joint bankers. As a result HCL have negotiated reductions in interest rate margins on both its term loan and working capital facilities. Net debt following the acquisition of JCJ currently stands at approx. £34m.

Management expects the proportion of net debt as a proportion of net assets to be lower in 2007 than in 2006. Kate Bleasdale, Chief Executive of Healthcare Locums plc, commented „I am delighted with the acquisition of JCJ which has allowed HCL to achieve its aim of having one third of its business in each of the sectors in which we operate. These markets, namely Allied Health Professionals, Qualified Social Workers and Doctors, have an annual value of approx. £1.2bn. We expect to realise significant synergistic benefits from this acquisition. Having achieved the business mix set out in our strategy, and being the market leader in each of our specialties, we are now in a position to focus on delivering strong organic growth through 2007 and beyond.” * before exceptional items and management charges. - ends For further information contact: Kate Bleasdale, Chief Executive Diane Jarvis, Finance Director Bell Pottinger Corporate & Financial David Rydell/Peter Otero Collins Stewart Europe Ltd Adrian Hadden

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