Buy Healthcare Locums - argues Rob Cullum, editor of TrendWatch

One key principle that underlies the TrendWatch investment strategy is that we normally only ever recommend shares that have just started a new uptrend. For the first time since the global credit crisis blew up, weve been forced to research more mature uptrends to find shares that satisfy our high standards. Fortunately, weve found a good un.

It wont be news to many investors that healthcare staffing in the UK is big business, but its quite an eye-opener nevertheless to be reminded just how big. The most recent figures available indicate that the staffing market was on course for an annual total of 5 billion.

Apart from the sheer size of the NHS, a number of factors contribute towards this huge figure: the desire for more flexible working conditions by staff, past failures to invest in the training of a sufficient number of specialist staff, the implementation of the Working Time Directive. But lying behind all of these are the demands of an ageing population, medical advances and also the fact that the vast sums sucked into administration actually seem to boost the need for external support, rather than the reverse.

The NHS accounts for around 45% of the total spend, but with another figure of 45% emanating from the provision of homecare staff. Demand for recruitment services provided by private-enterprise intermediaries such as Healthcare Locums is unlikely to be threatened by superbly organised and far-sighted direct recruitment policies of the client organisations such as the NHS, if you catch our drift.

Healthcare Locums, now four years old, is a group supplying specialist healthcare professionals to both the NHS and the private healthcare sector.

Its ruling ethos is the focus on higher-margin, longer-term specialist staff such as doctors, social workers and allied health professionals (AHPs), rather than the placement of nurses, for example. Working from two call-centres the group avoids the requirement for a costly high-street presence. The admission document argued that being able to supply staff nationwide without a local branch network enabled higher margins still.

This ethos means that, whilst it has lower volumes, there is a higher average transaction value and, in general, placements are longer term. Demand is not as immediate; and the overheads to service this market are therefore lower. It has an expanding database of registered locums across all specialties. Nearly half of these placed by the company at the time of its original flotation were from overseas; and the company had established an international recruitment division with 23 international partners across Europe, the Middle East, Australia, South Africa, New Zealand, the USA and Canada. This is a two-way trade placement outside the UK is a growing area of business.


On flotation, it comprised four discrete significant entities, brought together through acquisition.

the decade-old Thames Medics, a specialist in providing GPs, doctors and psychiatrists to the NHS and private hospitals. This was followed by
Eurosite Medical, a provider of AHPs to the same client groups. Then came
Medical Technical, a specialist in support staff (plaster technicians, sterile services technicians, phlebotomists and the like). This added scale, and also reach, enabling the group to access the supply of operating theatre technicians. Finally
Recruitment Specialist Group extended coverage to qualified social workers.
In November 2005 the company raised 13m at 55p. Six months into public life, it bought BBL for a total consideration of 10.5m, with 5.0m immediately payable in cash (financed by banking facilities) and a further 3m to be satisfied at completion by the issue of ordinary shares. 75% of BBL's income came from recruitment of hospital doctors; most of the rest came from recruitment of GPs.

After almost exactly a year as a public company, it raised 16m in the market at the same 55p price to acquire Blue Group, one of the leading qualified social-work agencies in the UK, for a maximum of 14m - with 10m payable in cash on completion. Blue Group's turnover in 2006 was 36m, and it was reckoned to have 15% of the market in Qualified Social Work (QSW) agencies. The acquisition was a three-way fit: First, Blue also had no branch network; the plan was to integrate the call centres. Second, the back-office integration was expected save 1m a year, starting in 2007. Third, it would help Healthcare Locums' intent of achieving a 33% split between its three core markets - AHPs, doctors and QSWs.

*The value of investments can go down as well as up. Investing in equities can lose you part or all of your capital. Smaller company shares can be relatively illiquid and thus hard to trade. And that makes such investments more of a high risk than larger company shares. Cornhill Asset Management Limited is an Appointed Representative of Argyle Investment Advisors Limited which is Authorised and regulated by the Financial Services Authority. UK-Analyst.com is owned by t1ps.com Ltd which is authorised and regulated by the FSA and can be contacted at 5-11 Worship Street, London EC2A 2BH or on 020 7562 3370.

This history makes the most recent figures for the 100m company irrelevant but the forecasts compelling (see table below).

2006 2007 2008*
Revenue (m) 64.63 144.1 169.50
Pre-tax profit (m) 1.08 12.40 16.90
Earnings per share (p) 7.10 9.00 12.30
Dividend per share (p) - 1.50 2.60

*Forecast
The main figure of interest in the 2006 accounts was the 16% organic growth. But the picture was clouded because it coincided with another substantial acquisition, JCT Locums, for 5.5m cash.

Current trading is robust and in line with management expectations, with one of the key drivers still being that of organic growth. The company is now market leader in each those three specialist divisions (AHPs, doctors and QSWs), and is very close to delivering the one-third income split targeted by the board. It says it will now cease strategic acquisitions so as to concentrate on integration.

The chief executive and 10% shareholder is Kate Bleasdale, a former nurse (ironic, given that her company avoids the nursing recruitment market). More importantly, however, shes a first-class businesswomen with a distinguished entrepreneurial history, and (by way of a footnote) a record-holder for the award of 2.2m damages when she sued her previous company for sex discrimination.

Performance to date has been dazzling; but it we should recognise that, with 13 acquisitions all told, this has, in a sense, been the easy bit. And with debt now running at 34m, up to nearly 6m to be paid out by way of deferred consideration and 67% of sales emanating from the NHS, the company may be a bit boxed-in.

Nevertheless, heading for earnings per share of 9p this year and 12.3p next works out to 12 times earnings in immediate prospect, falling to about 8.5 next year. These numbers leave plenty of medium-term price headroom. BUY

Acquisition of Healthcare Australia Holdings
TIDMHLO

RNS Number : 8756W

Healthcare Locums PLC

26 November 2010

26 November 2010

Healthcare Locums plc

Acquisition of Healthcare Australia Holdings Pty Ltd

The Board of Healthcare Locums plc ("HCL" or "the Company"), announces that the Company entered into an agreement on 26 November 2010 to acquire the entire issued and to be issued share capital of Healthcare Australia Holdings Pty Ltd ("HCA") from certain CHAMP Private Equity funds and a small number of private individuals, for a total consideration of AU$122.5m (approximately GBP75.2m) payable in cash on completion. The agreement is subject to certain conditions precedent, including finalisation of the debt financing for the acquisition. The consideration payable will be satisfied from new debt facilities and HCA is being acquired on a free of cash and free of debt basis.

The Board has recently stated its intention to pursue international acquisitions which will generate additional revenue outside of the UK. Currently HCL derives less than 50 per cent of its gross margin for the overall business from the NHS. The completion of this acquisition will broaden the HCL customer base outside of the UK and diversify the client base even further.

HCA was established in 2004 and is a leading provider of nursing agency staff to public and private health institutions in Australia. HCA has grown rapidly by acquisition in recent years and is today the largest national nursing agency in Australia, with a database of over 6,500 active nurses, which represents over 30% of the total nursing agency staff in Australia. The nursing agency market in Australia is highly fragmented and is estimated to be around AU$1bn in size.

Sadly, the market is underwhelmed at the news. Looks to be holding sub 100p.

Investors champion says disaster is waiting to happen here.

For what reason?

Go and read it in Investors Champion.

What is Inv Ch. Website, mag, paper? Try being a bit more helpful.

website.
http://www.investorschampion.com/

Steadily lower... now 88p

StockMarketWire.com
Investment manager Mason Hill Advisors now controls 20.11% of the voting rights of Healthcare Locums.

Mason Hill controls the voting rights to the 17.85% of Healthcare Locums shares registered in the name of Equinox Partners in addition to an indirect holding of 2.26%.

Healthcare Locums Plc
("HCL" or "the Company")


HCL announces that the ordinary shares of the Company have been suspended from trading on AIM with immediate effect.

The Board has strong reason to believe that the financial performance of HCL for the year to 31 December 2010 will be materially below market expectations.

Serious accounting irregularities have been brought to the attention of the Board as a result of which the Company will be carrying out an immediate investigation to consider the financial implications.

The Company also announces that both Executive Vice Chairman, Kate Bleasdale and Chief Financial Officer, Diane Jarvis have been suspended pending the outcome of the investigation.

A further announcement will be made in due course.

Oh crap!

It is crap from the start.

we warned in 283, what a bunch of.......

Kate Bleasdale and friends perform with Abba tribute band, Bjorn Again at her wedding.

Write up in todays Daily Mail SD

.

Telegraph report:

http://www.telegraph.co.uk/finance/newsbysector/pharmaceuticalsandchemicals/8282267/Healthcare-Locums-suspends-founder-Kate-Bleasdale-for-serious-accounting-irregularities.html

Healthcare Locums suspended executive vice-chairman Ms Bleasdale and finance director Diane Jarvis on Tuesday amid allegations of "serious accounting irregularities". The company also suspended its shares and warned financial performance for 2010 could be materially below expectations.

Although the company would not give details, the investigation is expected to look back to March 2010 when Healthcare Locums' shares plunged 30pc after it restated the prior year's accounts. The Telegraph understands the company could be facing further material readjustments to financial results.

With Ms Bleasdale at its head, Healthcare Locums has been one of the most closely followed companies on the Aim market. A steady stream of acquisitions pushed the shares up from 127p at the start of 2009 to 282p a year later. Since then they have fallen back to 112p, where they were suspended.

During that time the company saw one of its corporate brokers, Peel Hunt, walk away; it carried out acquisitions including the 6.7m purchase of Redwood Health, a company belonging to Ms Bleasdale's husband John Cariss; it also announced a bid approach from an unnamed suitor.

As The Telegraph reported in July, the business and assets of Redwood Health were bought by Healthcare Locums despite carrying a going concern warning.

The company's most recent acquisition, Healthcare Australia Holdings, was completed in December for 77.8m. The purchase made making Healthcare Locums the largest medical staff company in the world.

The flurry of events has not stopped Healthcare Locums enjoying almost unquestioning support from the City. Acquisitions were supported by shareholders, and analysts have consistently rated the company a "buy" or "hold".

Evolution Securities analyst Adrian Kearsay has been the only analyst in recent months to buck the trend by advising clients to sell. Hedge fund Cartesian Capital was one of the few fund managers to have a significant short position.

Other shareholders include Tosca, Lloyds, JP Morgan and Credit Suisse. Ms Bleasdale is reported to have a near-10pc stake in the company, worth about 12m. She holds it through a limited liability partnership.

Speaking on Tuesday, Ms Bleasdale said she was not aware of her suspension until the stock market announcement was made. She said: "I am absolutely devastated. I am just amazed. I grew this company from nothing to being the largest healthcare staffing company in the world."

Her suspension from Healthcare Locums is not the first setback in a colourful business career. She shot to prominence in 2002 after winning a 2.2m sexual harassment case against another healthcare recruiter she set up, Match Group, and the chairman she helped recruit, Sir Tim Chessells.

After taking some time out she returned with Healthcare Locums in 2003, growing the company into a publicly listed giant of the medical staffing market with a turnover of 172.1m last year.

Despite the apparent success she has continued to be dogged by disputes and litigation. Last year former business partner and inventor Debbie Forster alleged Ms Bleasdale and her husband had tried to oust her from a company she set up, Stayput Solutions.

23 February 2011
Healthcare Locums plc announces that Kathleen Veronica Bleasdale has resigned from the Board of Directors of the Company with immediate effect. This does not affect her status as an employee of the Company.

HLO also announces that Healthmark UK LLP has formally withdrawn its notice requisitioning a general meeting of the Company, details of which were announced on 8 February 2011.

As a result of the withdrawal of the general meeting requisition, the Company is no longer required to send a circular to shareholders convening a general meeting.

Healthcare Locums Plc

Directorate Change

The Board of Healthcare Locums Plc, ("HCL" or "the Company") announces that it has accepted the resignation of Mo Dedat as an Executive Director of the Company. While Mr Dedat will step down from the Board with immediate effect, he will remain in his full time role as the Company's Chief Operating Officer.

Peter Sullivan, Chairman, said: "It is important to restructure the Board to introduce new and independent talent. Mo's in-depth knowledge of the medical recruitment marketplace means his contribution is very important to HCL and I am pleased that, while he has stepped down from the Board, he will remain in his operational role and be fully engaged in taking the business forward.