RNS Number:1680M
Oasis Healthcare PLC
11 June 2003
An analyst briefing will be held at 10am, and a press briefing at 11.30am, today
at Buchanan Communications, 107 Cheapside, London EC2V 6DN.
For Immediate Release 11 June 2003
OASIS HEALTHCARE PLC
PRELIMINARY RESULTS ANNOUNCEMENT
For the year ended 31 March 2003
Oasis Healthcare Plc ("Oasis" or the "Company"), one of the UK's leading
corporate dentistry operator, announces its Preliminary Results for the year
ended 31st March 2003.
* Oasis now Nationwide and Market Leader
o At Year End March 2003: 128 practices, over #73m annualised turnover
o At Flotation - Summer 2000: 14 practices, under #6m annualised turnover
* Results for the Year Ended March 2003
o Turnover increased by 106% to #46.9m (2002: #22.8m)
o EBITDA #2.8m (2002: #1m)
o EBITDA margin up to 6% (2002: 4.6%)
o Pre-tax loss #2.3m, after exceptional items - in line with expectations
* Corporate Acquisitions - make Oasis a National Operator
o Dencare and Ora - added 46 sites: now fully integrated
o targeted #1.5m annualised cost savings to be exceeded
o Independent practices - additional 17 sites acquired
o Future acquisitions to be limited to geographic in-fills
and local mergers
o #40m of new debt facilities obtained at 1.35% above LIBOR
o Headcount now 2000+ of which 700 are clinicians
* Private Treatment Growth - 12 month shift:
o Oasis (excluding Dencare & Ora): private treatments up to 44% of turnover
from 36%
o Oasis (including Dencare & Ora): private treatments represent over 60% of
turnover
Ron Trenter, Chairman said:
"We expect to achieve further strong growth in revenues from private dental
care, particularly cosmetic and specialist treatments, as we build awareness of
the wide range of high quality private dentistry available across the practice
estate. The majority of planned cost reduction initiatives deriving from
consolidating the Dencare and Ora businesses with Oasis to secure both
purchasing improvements and organisational savings are now largely complete and
will deliver significant benefits during the current year. Consequently, the
Board believes Oasis is well-positioned to maintain the strong trend of
performance improvement it has demonstrated every year since flotation in 2000."
For further information, please contact :
Malcolm Hughes (Chief Executive, Oasis Healthcare Plc) 01603 625 335
Oliver Scott (KBC Peel Hunt Ltd) 020 7418 8900
Tim Anderson/Lisa Baderoon (Buchanan Communications) 020 7466 5000
Chairman's Review
Overview
Oasis completed the financial year ended 31 March 2003 as the leading corporate
dentistry operator in the UK market. Our nationwide estate of 128 general and
specialist dental practices represents annualised turnover of over #73 million
and is significantly ahead of our original pre-IPO objective in Summer 2000.
This anticipated that the business could be expanded within three years to
around 100 sites and annualised turnover of approximately #50 million from a
starting position of only 14 sites and annualised turnover of less than #6
million.
Such an achievement reflects a third successive year of rapid growth since our
flotation on the London Stock Exchange's Alternative Investment Market (AIM) and
I am pleased to report that this expansion has been accompanied by significant
growth in underlying profitability and cash generation. Following completion of
the restructuring and integration activities arising from acquisition of the
Dencare and Ora dental groups during the year, Oasis is no longer an
acquisition-led business. We are now well-positioned to deliver strong organic
growth based on continuing implementation of our practice development
initiatives across the enlarged business.
Results
Turnover in the year ended 31 March 2003 increased by 106% to #46.9 million
compared with #22.8 million in the previous financial year. Of this increase,
#14.0 million was attributable to 17 independent practice acquisitions, one
practice merger and the purchases of Dencare and Ora, all of which were
completed during the year. The mix of turnover between NHS and private
treatments showed a significant shift towards private care, with this component
of our business for the core estate of Oasis practices representing 44% compared
to 36% in the previous year. As a result of the Dencare and Ora deals, the
enlarged group now derives over 60% of turnover from private treatments.
At the practice level, we remain confident that an average EBITDA margin of 15%
can be achieved and sustained following implementation of our practice
development initiatives. Therefore, although our business is still at an early
stage in its development, I am pleased to report that 35 practices across the
enlarged Group were already at or above this level at the year-end, of which 17
are from the core Oasis estate, 12 from Dencare, 3 from Ora and 3 from Dentics.
Group EBITDA pre-exceptional costs in the year ended 31 March 2003 was #2.8
million compared with #1.0 million in the previous financial year which
demonstrates the improvement in the underlying operating margin being achieved
by the business. Central costs have reduced consistently in relation to turnover
as the Company's infrastructure has required proportionately less investment to
support the rapid growth of the business and we expect such costs to represent
no more than 5% of turnover on a continuing basis.
Operating profit pre-exceptional items and amortisation was #1.7 million
compared to #0.7 million in the prior year which reflects the increased
depreciation charge being incurred as a result of our capital investment
programme. We continue to believe that ensuring our practices provide
well-equipped, modern surgeries and attractive interiors underpins our practice
development strategy to expand the level of private treatments and positions
Oasis more strongly in the dental recruitment market.
Exceptional restructuring costs of #0.9 million were incurred as a direct result
of the Dencare and Ora acquisitions which primarily comprise redundancy payments
and allowance for onerous leases associated with the closure of the head offices
previously occupied by the two companies. Further non-recurring exceptional
costs of #0.5 million were incurred through operating these offices for a
limited period from the date of acquisition to closure. We believe annualised
savings arising from the consolidation of these businesses with Oasis will
exceed our original target of #1.5 million through elimination of duplicated
central costs and from benefits secured through exercising our increased
purchasing power with suppliers.
Net of all exceptional costs, Oasis incurred a loss before tax of #2.3 million
compared to a loss of #13,000 in the previous year. The Group's pre-tax result
includes a significant increase in interest payable to #1.3 million in the year
ended 31 March 2003 compared to #0.2 million in the previous year which reflects
the increased utilisation of debt facilities to fund acquisitions. Of this
increased interest charge, #0.1 million is an exceptional payment arising at
acquisition from early repayment of Dencare's high cost debt facilities.
Additionally, the continued high level of acquisition activity has resulted in a
significant increase in the Group's goodwill amortisation charge to #1.3 million
in the year ended 31 March 2003 compared to #0.5 million in the previous year.
Funding Position
During the financial year, new debt facilities totalling #40 million were
obtained from the Group's bankers, Bank of Scotland, to fund planned acquisition
activities. The majority of these facilities comprise term loans of just under
#35 million which carry a weighted average margin of 1.35% above LIBOR plus MLA
costs. As I stated in the Interim Report, your Board believes that debt
financing currently provides the most cost-effective means of funding the
business. Whilst investor sentiment appears to have become more negative towards
companies operating geared balance sheets, we are satisfied that the prospective
trading outlook for Oasis - underpinned by the highly cash-generative nature of
dentistry - supports this approach for our business.
Given that prevailing interest rates have remained low by historical standards,
the Board took the decision to lock in almost half of this term debt at a
weighted average LIBOR of 4% for three years to 31 March 2006. The remaining
balance of term loans are already locked in until 31 December 2003 at a LIBOR
rate of 3.96% and the Board will take account of the anticipated interest rate
trend at that time to determine whether a further long term fixed LIBOR
arrangement should be sought.
Acquisitions
Our acquisition activities over the past twelve months were dominated by the
purchases of the Ora and Dencare dental groups which together brought a total of
46 new sites to Oasis. Both of these two major acquisitions were complementary
to our existing business given that their geographic coverage was concentrated
in the South of England and, linked with our coverage in the Midlands and North
of England, enabled a true national practice estate to be established. Both
companies were also committed to a strategy of developing high quality practices
focused on private dentistry, particularly cosmetic and specialist treatments,
which matched the approach being implemented by Oasis. Initial performance from
these two businesses post-acquisition has been in line with expectations.
We also completed 17 independent practice acquisitions during the year which
delivered average annual turnover per site of #707,000, significantly greater
than the minimum target of #500,000. This demonstrates that more recent
acquisitions have typically been larger practices and were already operating
with a significant level of private treatments.
For the next year or so, we plan to restrict future acquisition initiatives to a
small number of in-fill purchases of high quality practices which address gaps
in our current geographic coverage, together with low cost merger opportunities.
The latter typically involve the purchase of goodwill from sole or dual
practitioners working close to existing Oasis sites, as exemplified by a merger
completed during the past year which enabled us to introduce an established
implantologist into our existing specialist practice in Kidderminster.
Organisation
The acquisitions of Dencare and Ora led to an organisational review being
undertaken which aimed to maximise cost savings whilst ensuring that the best
performers from the various companies were given appropriate roles in the
consolidated business. The resulting new management structure for the Group
provides stronger leadership and support teams for the operations and clinical
functions and, in the Board's view, will be a key factor in delivering targeted
growth in turnover and profitability.
The Group now comprises over 2,000 people, of whom some 700 are clinicians, with
the balance mainly accounted for by practice staff in nursing, reception and
local management roles. The practices are supported by field-based operations
and clinical managers and a core head office team in Norwich responsible for
service functions such as finance, IT, human resources and marketing. Almost
everyone working for Oasis has been affected by the dramatic developments
associated with our rapid growth over the past year and the Board would like to
record its appreciation of the excellent contributions made by our clinicians
and employees during this period of major change.
Outlook
The future emphasis for the Group will be on securing significant organic growth
through continuing implementation of our various practice development
initiatives to increase turnover and reduce costs :
* Firstly, we expect to achieve further strong growth in revenues
from private dental care, particularly cosmetic and specialist treatments, as we
build awareness of the wide range of high quality private dentistry available
across the practice estate.
* Secondly, the majority of planned cost reduction initiatives
deriving from consolidating the Dencare and Ora businesses with Oasis to secure
both purchasing improvements and organisational savings are now largely complete
and will deliver significant benefits during the current year.
Consequently, the Board believes Oasis is well-positioned to maintain the strong
trend of performance improvement it has demonstrated every year since flotation
in 2000 in terms of growth in turnover, underlying operating profit and cash
generation.
Ron Trenter
Chairman
Consolidated profit and loss account
for the year ended 31 March 2003
Before Exceptional
exceptional items
items (note 4) Total
Notes 2003 2003 2003 2002
#'000 #'000 #'000 #'000
Turnover
Continuing operations 32,837 - 32,837 22,798
Acquisitions 14,033 - 14,033 -
46,870 - 46,870 22,798
Cost of sales 3 (28,073) - (28,073) (13,667)
Gross profit 3 18,797 - 18,797 9,131
Administrative expenses (excluding amortisation) 3
(17,081) (1,438) (18,519) (8,446)
Operating profit before amortisation 3 1,716 (1,438) 278 685
Amortisation of goodwill 3 (1,304) - (1,304) (509)
Total administrative expenses (18,385) (1,438) (19,823) (8,955)
Operating profit/(loss)
Continuing operations 3 635 (153) 482 176
Acquisitions 3 (223) (1,285) (1,508) -
Total operating profit/(loss) 3 412 (1,438) (1,026) 176
Interest receivable and similar income 94 10
Interest payable and similar charges (1,336) (199)
Loss on ordinary activities before taxation (2,268) (13)
Tax on loss on ordinary activities 686 (184)
Loss for the financial year (1,582) (197)
Loss per share
Loss per share 5 (2.47)p (0.35)p
Diluted loss per share 5 (2.47)p (0.35)p
There is no difference between the loss on ordinary activities before taxation
and the loss for the year stated above, and their historical cost equivalents.
The Group had no other gains or losses in the year other than those included in
the profit and loss account above.
Consolidated balance sheet
at 31 March 2003
2003 2002
#'000 #'000
Fixed Assets
Intangible assets 44,155 13,941
Tangible assets 12,130 5,384
56,285 19,325
Current assets
Stocks 1,192 409
Debtors: amounts falling due within one year 5,415 3,098
Deferred taxation 692 -
Cash at bank and in hand 704 190
8,003 3,697
Creditors: amounts falling due within one year (13,048) (9,684)
Net current liabilities (5,045) (5,987)
Total assets less current liabilities 51,240 13,338
Creditors : amounts falling due after more than one year (35,497) (1,554)
Provision for liabilities and charges (604) (163)
Net assets 15,139 11,621
Capital and reserves
Called up share capital 816 586
Share premium account 17,362 12,492
Profit and loss account (3,039) (1,457)
Equity shareholders' funds 15,139 11,621
Consolidated cash flow statement
for the year ended 31 March 2003
Note 2003 2002
#'000 #'000
Net cash inflow from operating activities 6 1,902 624
Returns on investments and servicing of finance
Interest received 94 10
Interest paid (982) (102)
Interest elements of hire purchase payments (142) (32)
Net cash outflow from returns on investments and servicing of
finance
(1,030) (124)
Capital expenditure
Purchase of tangible fixed assets (3,726) (2,842)
Government grants received - 360
Net proceeds of sale of tangible fixed assets 226 451
Net cash outflow from capital expenditure (3,500) (2,031)
Acquisitions
Purchase of subsidiary undertakings (7,955) -
Net overdrafts acquired with subsidiary undertakings (1,536) -
Purchase of businesses (7,112) (8,346)
Net cash outflow from acquisitions (16,603) (8,346)
Cash outflow before financing (19,231) (9,877)
Financing
Issue of ordinary shares 65 3,587
Share issue costs - (93)
Increase in bank loan due within one year - 5,500
Increase in debt due after more than one year 28,924 -
Settlement of subsidiary's debt (9,772) -
Payment of deferred consideration (650) (186)
Capital element of hire purchase payments (605) (193)
17,962 8,615
Decrease in cash in the year 7 (1,269) (1,262)
Notes to the Preliminary Announcement
for the Year ended 31 March 2003
1. The financial information set out above does not constitute the company's
statutory financial statements for the years ended 31 March 2003 or 31 March
2002 but is derived from those financial statements. Those financial statements
have been reported on by the Company's auditors. The report of the auditors was
unqualified and did not contain a statement under S.237 (2) or (3) Companies Act
1985. The statutory financial statements for the year ended 31 March 2002 have
been delivered to the Registrar of Companies. The statutory financial statements
for the year ended 31 March 2003 will be delivered to the Registrar of Companies
following the Company's Annual General Meeting.
2. Basis of preparation
The financial statements have been prepared on the basis of the accounting
policies/estimation techniques set out in the Group's statutory financial
statements for the year ended 31 March 2002.
3. Cost of sales, gross profit and administrative expenses
2003 2002
Continuing
Operations Acquisitions Total Total
#'000 #'000 #'000 #'000
Turnover 32,837 14,033 46,870 22,798
Cost of sales (19,787) (8,286) (28,073) (13,667)
Gross profit 13,050 5,747 18,797 9,131
Administrative expenses (11,629) (5,452) (17,081) (8,446)
Operating profit before amortisation and
exceptional items
1,421 95 1,716 685
Amortisation (786) (518) (1,304) (509)
Operating profit before exceptional items 635 (223) 412 176
Exceptional items (153) (1,285) (1,438) -
Operating profit/(loss) 482 (1,508) (1,026) 176
4. Exceptional items
2003 2002
Continuing
Operations Acquisitions Total
#'000 #'000 #'000 #'000
Redundancy costs 98 364 462 -
Provision for onerous leases - 354 354 -
Abortive acquisition costs 55 - 55 -
Scrapping of fixed assets - 74 74 -
Costs of subsidiary Head Offices between
acquisition and closure - 493 493 -
153 1,285 1,438 -
Following the completion of the purchases of Ora and Dencare, the Board decided
to close the former Head Office operations associated with each of these
businesses. Redundancy costs of #364,000 were incurred as a result. The leases
relating to these offices are short term (up to May 2005) and full provision has
been made for outstanding rental obligations under these leases. Losses of
#74,000 arose as a result of scrapping redundant/surplus assets. In addition to
these termination costs, incremental, non- recurring expenditure of #493,000 was
incurred whilst the functions were transferred back to our Head Office in
Norwich. These relate to duplicated costs arising between the date of
acquisition and subsequent closure. The remaining costs arose as a result of a
strategic review of the enlarged Group's cost structure and strategy.
5. Loss per share
2003 2002
#'000 #'000
Loss attributable to shareholders 1,582 197
Weighted average number of shares in issue 63,939,466 55,795,629
Total shares for calculating diluted loss per share 63,939,466 55,795,629
The calculation of loss per share is based on the loss after taxation and a
weighted average of ordinary shares of 1p each in issue during the period. The
diluted loss per share calculated is based on the same figures.
For diluted loss per share, the weighted average number of ordinary shares in
issue is adjusted to assume conversion of all potential dilutive ordinary
shares. The group has only one category of potential dilutive ordinary shares:
those share options granted where the exercise price is less than the average
market price of the company's ordinary shares during the year. Since the group
has made a loss in the year, there is no dilution effect of the potential
dilutive ordinary shares.
6. Reconciliation of operating profit/(loss) to net cash outflow from
operating activities
2003 2002
#'000 #'000
Operating profit before exceptional items 412 176
Depreciation on tangible fixed assets 1,080 354
Amortisation of intangible fixed assets 1,304 509
Government grant amortisation (38) (38)
Loss/(profit) on sale of tangible fixed assets 30 (18)
Increase in stocks (171) (61)
Increase in debtors (701) (1,743)
Increase in creditors and provisions 950 1,445
Net cash inflow from operating activities before exceptional items 2,866 624
Exceptional items (964) -
Net cash inflow from operating activities 1,902 624
7. Reconciliation of net cash flow to movement in net (debt)/funds
2003 2002
#'000 #'000
Decrease in cash in the year (1,269) (1,262)
Cash inflow from changes in debt financing (17,897) (5,121)
Change in net debt resulting from cash flows (19,166) (6,383)
Increase in debt from acquisitions (11,101) -
Non cash movements (1,458) (1,650)
(31,725) (8,033)
Net funds/(debt) at 1 April 2002 (7,854) 179
Net debt at 31 March 2003 (39,579) (7,854)
8. Analysis of net (debt)/funds
At 1 April Cash flow Acquisition Non cash At 31
2002 #'000 (excl. cash movements March
#'000 and #'000 2003
overdrafts) #'000
#'000
Cash 190 514 - - 704
Overdraft (316) (1,783) - - (2,099)
(126) (1,269) - - (1,395)
Debt:
Debt due within one year (5,500) - - 4,500 (1,000)
Debt due after more than one year - (28,924) - (4,547) (33,471)
Settlement of acquired debt - 9,772 (9,772) - -
Finance leases (831) 605 (1,329) (615) (2,170)
Deferred consideration (1,397) 650 - (796) (1,543)
(7,854) (19,166) (11,101) (1,458) (39,579)
This information is provided by RNS
The company news service from the London Stock Exchange
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