Contract with NHS

Tribal Group PLC 10 December 2004 10 December 2004 Tribal Group plc Tribal Group closes £214m contract with NHS Following the announcement in February 2004 of its selection as preferred bidder, Tribal Group is pleased to announce today that, through its wholly-owned subsidiary, Mercury Health, it has reached financial close on a five year NHS contract to design, set up and manage a regional network of five treatment centres in mid-Sussex, Portsmouth, Medway, Wycombe and Havant. The contract guarantees revenues to Mercury Health of £214m. The contract provides Mercury Health with a significant share of a substantial new market in UK healthcare delivery. The contract guarantees a base level of surgical and diagnostic caseload for five years but Mercury Health will also be seeking, during the initial contract term and beyond, additional volumes from the NHS and other potential sources aside from this contract. A number of preliminary opportunities are currently being reviewed. The opening of the centres will be phased, with the earliest opening in Autumn 2005 and the final one opening in January 2008. The largest centre, in mid-Sussex, will open in July 2006, although Mercury Health will be providing interim services in mid-Sussex from Spring 2005. As a result of the phased opening programme, Tribal Group expects to be delivering approximately 30 per cent. of maximum guaranteed annual volumes in the year ending 31 March 2006 and 80 per cent. in the year ending 31 March 2007. The contract is therefore expected to make its first positive contribution to Tribal Group's earnings in the year ending 31 March 2007. The capital funding for this contract is £51m, satisfied as to £17.5m from Tribal Group's cash resources and existing debt facilities and £33.5m of non-recourse project debt underwritten by Royal Bank of Scotland and HBoS. This funding will be used for property and infrastructure (£33.5m), implementation (£14.1m) and working capital (£3.4m). In addition, £6.5m of medical equipment has been financed through operating leases with Lombard. Tribal Group's principal construction partner is Amec, with whom it has entered into a contractual agreement that provides for a guaranteed maximum price for the construction programme. The new treatment centres will perform a range of in-patient and out-patient elective surgery and diagnostic procedures for non-acute conditions. The NHS' objective is to increase capacity and effect a sustained reduction in waiting lists through securing new capacity from the independent sector. The Board of Tribal Group hopes that in line with the Prime Minster's announcement in October 2004, that the percentage of elective surgery carried out by the independent sector will substantially increase from the current 3 per cent. over the next few years. The board therefore expects Mercury Health to submit bids for future contracts. Tribal Group also announces today that it has agreed a clinical partnership with Hospital for Special Surgery (HSS) in New York, one of the world's leading orthopaedic hospitals. HSS will be providing orthopaedic and specialist clinical input and will also be supporting Mercury Health's future bids. John Reynolds, Chief Executive Officer of HSS, will be working as a senior adviser to Mercury Health. Henry Pitman, Tribal Group's Chief Executive, commented: 'This is a very important contract and we are delighted that we have reached financial close. At £214m, it is the largest contract that the Group has ever won, and our success in securing it confirms the strength of our business model. We have an excellent management team in Mercury Health that will be augmented by the support of HSS and we therefore aim to bid for and win additional contracts procured by the NHS.' Contact: Henry Pitman 01285 886020 Chief Executive, Tribal Group Simon Lawton 01285 886020 Group Finance Director, Tribal Group Peter Martin 0118 925 5811 Chief Executive, Mercury Health Neil Bennett / Colin Browne 020 7379 5151 Maitland This information is provided by RNS The company news service from the London Stock Exchange

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