14th May 2007 07:01
Southern Cross Healthcare Grp PLC14 May 2007 Southern Cross Healthcare Group PLC Southern Cross reports strong half-year results to 1 April 2007 and announces further portfolio growth Monday, 14 May 2007 - Southern Cross Healthcare Group PLC (LSE: SCHE) ('SouthernCross' or the 'Company'), the UK's largest care home provider, today announcesits interim results for the 26 weeks ended 1 April 2007. Operating Highlights • Homes formerly operated by Life Style Care and Focus Healthcare add 3,050 beds to Group capacity • Other acquisitions added a further 162 beds with another 351 beds added through the Group's development programme • Group total of 640 homes at 1 April 2007 with 32,420 available beds (2006 - 28,917 beds) • Strong operational performance in seasonally weaker first half Financial Highlights • Revenue increased by 17% to £336.3m (2006 - £288.7m) • Home EBITDAR before central costs up 18% to £98.1m (2006 - £83.1m) • Home EBITDAR before central costs margin of 29.2% (2006 - 28.8%) • Adjusted EBITDA up 42% to £21.8m (2006 - £15.4m) • Adjusted earnings per share 7.72p (2006 - loss (4.55)p) • Net cash inflow from operations of £25.5m (2006 - £20.1m) representing a cash conversion of Adjusted EBITDA of 117% (2006 - 131%) • Interim dividend of 2.5p (2006 - nil) per share declared Further Portfolio Expansion Announced Today • 10 homes acquired comprising 470 beds • 141 beds opened in two new developments from the pipeline • In total, the Group now operates 652 homes and 33,031 beds Notes: 1. 2006 refers to the comparative 26-week period ended 2 April 2006. 2. Home EBITDAR before central costs represents profitability at a homelevel after taking account of home payroll and home running costs, but beforerental charges on operating leases, central costs and depreciation on homeassets. 3. Adjusted EBITDA is defined as earnings before interest, tax,depreciation and amortisation as well as exceptional charges and charges forfuture minimum rental increases. Adjusted earnings per share is defined asearnings before exceptional items, charges for future minimum rental increases,and the taxation impact thereof, divided by the weighted average number ofshares. Philip Scott, Chief Executive of Southern Cross, said: "I am pleased to report another successful period of growth and strongoperational performance for the Group in the first half the year, during whichwe have continued to consolidate our position as the market leader with furtheracquisitions and the completion of a number of development projects. Thefundamentals in our sector remain strong and we fully expect to be at theforefront of consolidation activity in what remains a fragmented industry." Enquiries: Southern Cross Healthcare Group PLC Tel: +44 (0)1325 351100Philip Scott, Chief ExecutiveGraham Sizer, Finance Director Financial Dynamics Tel: +44 (0)20 7831 3113David Yates / Deborah Scott About Southern Cross Southern Cross is, in terms of number of beds, the largest UK provider of carehome services for the elderly and a major provider of specialist services forpeople with physical and/or learning disabilities. The Company's care homes forthe elderly operate under two distinct brands: Southern Cross Healthcare andAshbourne Senior Living. Both brands provide a range of social and personalcare services and nursing care services for elderly people with physicalfrailties and differing forms of dementia. The Company's specialist servicesoperate under the Active Care Partnerships brand and provide long-term careservices for people with physical and/or learning disabilities and for youngerpeople with complex forms of challenging behaviour. Southern Cross is focused on providing high quality care in well investedfacilities, seeking to be the home of choice in each local community in which itoperates. The Company provides care services for most of the local authoritiesin the UK which, together with the NHS, represent over circa 70% of theCompany's revenues. Its care home portfolio is largely purpose-built with ahigh percentage of single occupancy rooms and rooms with ensuite bathrooms.Occupancy levels in its elderly care segment are consistently in excess of 90%. This announcement includes statements that are, or may be deemed to be, "forwardlooking statements". These forward looking statements can be identified by theuse of forward looking terminology, including the terms "believes", "estimates","plans", "projects", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparableterminology. These forward looking statements include matters that are nothistorical facts and include statements regarding the Company's intentions,beliefs or current expectations concerning, among other things, the Company'sresults of operations, financial condition, liquidity, prospects, growth,strategies and the outlook on the care home industry. By their nature, forwardlooking statements involve risk and uncertainty because they relate to futureevents and circumstances. CHIEF EXECUTIVE'S STATEMENT Overview I am pleased to report another successful period of growth and strongoperational performance for the Group. We have continued to consolidate ourposition as the market leader with further acquisitions and development projectsadded during the period. 26 weeks 26 weeks ended ended 1 April 2 April 2007 2006 £'m £'m ______ ______Revenue 336.3 288.7Home EBITDAR before central costs 98.1 83.1Margin - % 29.2 28.8Rent - charge for amounts currently payable 64.6 56.0Rent cover - times 1.52x 1.48xAdjusted EBITDA 21.8 15.4Revenue growth - % 16.5Adjusted EBITDA growth - % 41.6 ______ Note: Rent cover is defined as Home EBITDAR before central costs as a multipleof the charge for rents currently payable. Revenue growth in the first half of the year was 17% with occupancy rates stableat 91.0%, despite experiencing the anticipated normal seasonal fall in occupancyover the winter period. Excluding the impact of immature homes (which are newdevelopments or refurbished homes that have been trading for less than 12months), the underlying occupancy rate was 91.8%. April has already seen thepartial recovery of the winter seasonal occupancy downturn with completerecovery expected during May. Effective control of running costs and the operational leverage of the businessmodel translated the revenue growth into Adjusted EBITDA growth of 42%. Firsthalf Adjusted EBITDA of £21.8m reflects the normal seasonal pattern of earnings.This seasonality is caused by higher payroll costs in the first half, due to thetiming of National Minimum Wage and public sector pay announcements, and loweroccupancy rates over the winter. The second half is typically characterised byhigher occupancy levels during the summer, annual fee rate increases in Apriland only marginal underlying cost increases. It should also be noted that first half trading includes only a five week impactfrom the Life Style Care acquisition completed on 26 February 2007. Rent cover has increased to 1.52 times and Adjusted EBITDA/Net finance costsprovides interest cover of over 12 times. Homes and Beds as at 1 April 2007 Number of available beds Number of Homes Acquired Developed As at 1 October 2006 580Managed for third parties 15 ______Leased/owned 565 ______Homes previously managed for third parties 15 742New developments opened 5 297Extensions to existing homes - 18Homes closed for refurbishment, reopened - 36Homes divested (2)Alpha Care 5 162Life Style Care PLC 23 1,737Management agreement forFocus homes 29 ______As at 1 April 2007 640 2,641 351Managed for third parties 29Leased/owned 611 ______ Homes and Beds as at 1 April 2007 (continued) Number of available beds Managed Divested TotalAs at 1 October 2006 28,917Managed for third parties 742 ______Leased/owned 28,175 ______Homes previously managed for third parties 742New developments opened 297Extensions to existing homes 18Homes closed for refurbishment, reopened 36Homes divested - (60) (60)Alpha Care 162Life Style Care PLC 1,737Management agreement forFocus homes 1,313 1,313 ______As at 1 April 2007 1,313 (60) 32,420Managed for third parties 1,313Leased/owned 31,107 ______ Expansion of Portfolio The number of beds operated has grown from 28,917 at 1 October 2006 to 32,420 at1 April 2007, an increase in bed capacity of 3,503 beds or 12.1%. Details of thebed growth for this period are summarised in the table above. We have added4,224 beds since IPO in July 2006. Our sale and leaseback operating model continues to deliver an acquired "Opco"for nominal consideration. Together with new developments held off balance sheetuntil completion, our capital light model continues to deliver shareholdervalue. As planned, the Group completed the assignment of leasehold interests andbusiness transfer of 29 homes previously leased by Focus Healthcare but managedby the Group. Also acquired during the period were 1,737 beds in the Life Styleacquisition. Operational management is focused on completing the integration ofthis acquisition. That process is progressing satisfactorily and the portfoliois trading in line with expectations at this stage of the integration programme. Subsequent to 1 April 2007, the Group has completed the acquisition of a further10 care homes (470 beds) and opened two new-build homes (141 beds) from thedevelopment pipeline. Development Pipeline During the first half we have completed seven new development projects. We haveannounced the opening of two further facilities today (141 beds) and expect toopen a further six facilities and 400 beds by the end of the financial year (twoof which have been announced today). New homes are an extremely important partof our expansion plan and we have agreements in place for a further 1,000 bedsto be delivered by September 2008. We are now looking at opportunities to expand our development pipeline for 2009/2010. Dividends Following the first part year dividend of 1.1p per share (being a pro-ratapayment for the 82 days the Company was listed prior to the financial year end),£2.1m in total, paid on 9 February 2007, the Board has declared an interimdividend of 2.5p per share, £4.7m in total, to be paid on 22 June 2007, to thoseShareholders on the register of members at close of business on 25 May 2007. Board Changes On 4 April 2007, Joseph Baratta, the nominee director of the Blackstoneshareholders, resigned as a non-executive director of the Company. Thisresignation followed the sale of Blackstone's holding in the Company. The Board wishes to record its gratitude to Joe for his significant contributionto the success of the Company both prior to and following the listing of itsshares. Staff Clearly, we are indebted to our staff. Their commitment to providing highstandards of care to our residents has ensured that we can continue to build onour positive reputation as a quality Care Provider. In turn we shall continue to develop a number of staff initiatives that willreward those personnel who remain with the Company. We remain committed to staff training and development and aim to provide realcareer opportunities for those personnel who wish to remain with the Company forthe long term. Market Outlook The fundamentals of the sector remain positive - increasing demand for services,continued contraction in supply as first generation homes exit the marketplace,fee rate increases ahead of inflation and ongoing access to European labourmarkets containing payroll cost. We shall, therefore, continue to participate inthe ongoing consolidation of the market by acquiring high-quality businesseswhilst expanding the development pipeline wherever possible, without the needfor equity investment. Occupancy rates remain above 90% and disclosed fee rateincreases for April fee reviews indicate an overall average spot increase of4.4% to 4.5%. Combined with the normal incremental fee rate improvements throughthe second half, we expect overall fee increases to remain ahead of inflation. Following the recent announcement of the increase in the adult minimum wage from£5.35 to £5.52 per hour, a rise of 3.2%, we believe there is good visibilityover forthcoming payroll cost increases. This increase, together with additionalstaff holiday entitlements set out in the Working Time Directive, will form thebasis of our pay reviews in October of this year. We have continued to control our other operating costs and leverage our existingcentral infrastructure as the Group has expanded. Home running costs were 13.4%of revenue (first half 2005/2006 - 13.6%) and central costs 3.6% of revenues(first half 2005/2006 - 4.1% of revenue, excluding £1.5m of exceptional centralcosts). With rents either fixed or capped, we remain convinced that our business modelis sustainable for the long term, given the demographic pressure and increasingdemand that is about to impact the residential care sector. We continue to see opportunities to increase our market share with theacquisition and development of modern, purpose built care facilities. Thereremains significant landlord interest in this sector and we fully expect to beat the forefront of consolidation activity in what remains a fragmentedindustry. The demand for our services remains strong and we are totally committed toproviding the best possible levels of care and safety for all of our clients atall of our homes. Philip Scott Chief Executive FINANCIAL REVIEW Trading Activities Over the 26 weeks ended 1 April 2007, the Group recorded significant year onyear growth with revenue increasing by 17% to £336.3m and Adjusted EBITDA by 42%to £21.8m. This significant improvement in revenue was principally driven by the expansionin bed numbers. In addition, at the Adjusted EBITDA level, effective control ofvariable costs contributed to an improvement in year on year performance anddemonstrated the operational leverage in the business. A comparison of theunderlying trading performance, over the same comparative period, is summarisedbelow: Underlying Trading 26 weeks 26 weeks ended ended 1 April 2 April 2007 2006 continuing continuing £'m £'m ______ ______Revenue 327.3 288.7Operating income/(loss) 1.6 (0.6)Home EBITDAR before central cost margin - 29.2 28.8% increaseAdjusted EBITDA 21.0 15.4Occupancy - % 91.0 90.9 ______ ______ 1 Adjusted EBITDA before exceptional central costs and charge for future minimumrental increases. 2 Underlying growth refers to the continuing business at 1 April 2007, excludingthe impact of acquisitions and disposals, compared to 2 April 2006. Revenue increased by 13% on a like-for-like basis whilst Adjusted EBITDAincreased by 42%. Rent Total rent for the 26 weeks ended 1 April 2007 increased by £19.3m relative tothe comparable period for 2006, to £84.2m. The increase is predominantly aconsequence of a higher non cash charge for future minimum rental increasesamounting to £19.6m (2006 - £8.9m). The cash charge for rent currently payableincreased by £8.6m (15%) to £64.6m for the 26 weeks ended 1 April 2007. Theincrease is consistent with the increase in average available beds (11%) as wellas rental increases period on period. Home EBITDAR before central costs as a multiple of the charge for rent currentlypayable improved to 1.52 times for the 26 weeks ended 1 April 2007 (2006 - 1.48times). Central Costs Central costs for the period amounted to £12.2m, a decrease of £1.0m compared tocentral costs (excluding exceptional central costs) recorded for the 26-weekperiod ended 2 April 2006. The decrease reflects the realisation of synergiesfollowing the completion of the integration of acquisitions. The level ofcentral costs recorded in the current period is in line with expectations, giventhe current operational size of the Group. There were no exceptional costs charged to profit and loss in the 26 week periodended 1 April 2007 (2006 - £1.5m). Finance Costs Financing costs for the period amounted to £2.7m, a decrease of £9.1m comparedto costs for the 26-week period ended 2 April 2006. The charge in the 26 weeksto 1 April 2007 relates to the existing term loan finance. The prior yearrepresented financing costs of the pre-IPO debt structure with £5.3m of deepdiscount bond interest charges in the period. The deep discount bonds wererepaid as part of the initial public offering on 12 July 2006. Finance income comprises treasury deposit interest and the recognition of thecurrent market value of interest rate hedging arrangements in place relating to£30m of bank term loans. Taxation The tax credit on earnings before taxation for the period to 1 April 2007 was£1.4m (2006 - £0.1m), representing a headline rate of 233% (2006 - 1.0%).However, this headline rate is affected by goodwill amortisation, exceptionalitems and the impact of the utilisation of tax losses. The pre-exceptional, pre-goodwill amortisation tax charge under UK GAAP of £4.5m(2006 - £1.4m) represents an effective tax rate of 28.8%. The cause of thevariance of the effective rate to the standard rate of 30% is due to utilisationof tax losses not previously recognised for deferred tax purposes. Earnings per Share Basic earnings per share for the period was 0.4p (2006 - 11.2p loss). Adjustedearnings per share for the period before future minimum rental increase charges,exceptional costs and the taxation impact thereof, was 7.7p (2006 - 4.6p loss).The growth in this adjusted earnings per share measure is consistent with theimprovement in operating results. However, the comparative result relates to thedebt structure in place prior to the initial public offering on 12 July 2006. Ifthe existing capital structure had been in existence with the level ofcorresponding finance costs for the entire period ended 2 April 2006 equal tothe charge for the period ended 1 April 2007, the adjusted earnings per sharefigure would have been 0.7p. Financing Net debt decreased by £22.3m since 1 October 2006 to £45.2m at 1 April 2007. Themovement was primarily a result of repayment of a £18.1m development facilityloan following the sale of United Propco as well as a £3.0m repayment of bankterm loans. Loan notes amounting to £0.7m were also redeemed in the period. Cash Flow 26 weeks 26 weeks ended ended 1 April 2 April 2007 2006 £m £m ______ ______Cash flows from operating activities 25.5 20.1Net finance costs and taxation (0.3) (11.5)Investing activities 2.6 (47.9)Financing activities (26.4) 43.2 ______ ______ Net increase in cash 1.4 3.9 ______ ______ Net cash inflow from operations was £25.5m (2006 - £20.1m), representing a cashconversion ratio compared to Adjusted EBITDA of 117% (2006 - 131%). The decrease of £11.2m in the cash outflow of servicing interest and taxation isdue to the greater debt structure and consequent interest cost in the 26-weekperiod ending 2 April 2006. Investing activities in the period generated a cash inflow of £2.6m (2006 -£47.9m outflow) due to the sale of United Propco for £18.1m. Excluding thistransaction, the cash outflow from investing activities in the period was £15.5mcomprising ongoing capital expenditure of £7.1m (2006 - £4.3m) and developmentexpenditure of £7.3m (2006 - £9.0m). The period to 2 April 2006 included theacquisition cost of Ashbourne amounting to £39.4m. The cash outflow from financing activities was £26.4m (2006 - £43.2m inflow) dueto repayment of bank debt and loan notes, highlighted above, plus a dividendpayment of £2.1m (2006 - £nil). The cash inflow from financing activities forthe 26 weeks ended 2 April 2006 of £43.2m was mainly due to bank loans drawn tofinance the Ashbourne acquisition. Graham Sizer Chief Financial Officer Consolidated Income Statement 26 weeks 26 weeks 26 weeks 52 weeks ended ended ended ended 1 April 2 April 1 October 1 October 2007 2006 2006 2006 unaudited unaudited unaudited audited Note £'m £'m £'m £'m ______ ______ ______ ______Revenue 336.3 288.7 322.2 610.9Home payroll costs (192.9) (166.4) (176.6) (343.0)Home running costs (45.3) (39.2) (39.1) (78.3) ______ ______ ______ ______Home EBITDAR before central costs 98.1 83.1 106.5 189.6Rent ______ ______ ______ ______Charge for rental amounts currently payable (64.6) (56.0) (60.1) (116.1)Charge for future minimum rental increases (19.6) (8.9) (21.8) (30.7) ______ ______ ______ ______Total rent (84.2) (64.9) (81.9) (146.8) Home EBITDA before central costs 13.9 18.2 24.6 42.8Central costs (12.2) (13.2) (17.6) (30.8)Other operating income 0.5 - 0.9 0.9 ______ ______ ______ ______ ______ ______ ______ ______Adjusted EBITDA before exceptional central 21.8 15.4 33.4 48.8costs and charge for future minimum rentalincreasesExceptional central costs - (1.5) (3.7) (5.2)Charge for future minimum rental increases (19.6) (8.9) (21.8) (30.7) ______ ______ ______ ______ EBITDA 2.2 5.0 7.9 12.9Profit on disposal of property, plant and 1.6 0.1 0.3 0.4equipment and subsidiary undertakingsDepreciation (6.0) (4.9) (5.2) (10.1)Amortisation 3.4 (0.8) (0.8) (1.6) ______ ______ ______ ______ Operating income/(loss) 1.2 (0.6) 2.2 1.6Finance costs (2.7) (11.8) (7.5) (19.3)Finance income 0.9 - 0.3 0.3 ______ ______ ______ ______ Loss before taxation (0.6) (12.4) (5.0) (17.4)Taxation 3 1.4 0.1 5.2 5.3 ______ ______ ______ ______ Profit/(loss) attributable to ordinary 0.8 (12.3) 0.2 (12.1)shareholders ______ ______ ______ ______ Pence Pence Pence Pence Note per share per share per share per shareProfit/(loss) per share attributable toequity shareholdersBasic 4 0.43 (11.15) 0.14 (9.35) ______ ______ ______ ______ Diluted 4 0.43 (11.15) 0.14 (9.35) ______ ______ ______ ______ All of the above activities relate to continuing operations. Consolidated Balance Sheet As at As at As at 1 April 2 April 1 October 2007 2006 2006 unaudited unaudited audited Note £'m £'m £'m ______ ______ ______ASSETSNon-current assetsProperty, plant and equipment 95.8 87.5 96.3Goodwill 196.4 193.5 196.0Other intangible assets 1.6 3.2 2.4Deferred tax assets 19.9 9.3 12.9Other non-current assets 2.6 3.3 2.5 ______ ______ ______ Total non-current assets 316.3 296.8 310.1 ______ ______ ______ Current assetsCash and cash equivalent 23.3 14.8 21.9Trade receivables 30.4 25.2 28.8Inventories 1.6 1.6 1.1Other current assets 11.1 10.9 12.8 ______ ______ ______ Total current assets 66.4 52.5 64.6 ______ ______ ______ Total assets 382.7 349.3 374.7 ______ ______ ______ LIABILITIESCurrent liabilitiesShort-term financial liabilities (5.8) (26.5) (25.8)Trade and other payables (75.5) (63.6) (65.5) ______ ______ ______ Total current liabilities (81.3) (90.1) (91.3) ______ ______ ______ Non-current liabilitiesLong-term financial liabilities (62.7) (222.1) (63.6)Provisions and similar obligations (7.4) (8.5) (8.1)Future minimum rental payable (83.3) (41.9) (63.7) ______ ______ ______ Total non-current liabilities (153.4) (272.5) (135.4) ______ ______ ______ Total liabilities (234.7) (362.6) (226.7) ______ ______ ______ Net assets/(liabilities) 148.0 (13.3) 148.0 Ordinary shares 1.9 - 1.9Share premium 161.5 - 161.5Retained deficit (15.4) (13.3) (15.4) ______ ______ ______ Shareholders' equity/(deficit) 5 148.0 (13.3) 148.0 ______ ______ ______ Consolidated Cash Flow Statement 26 weeks 26 weeks 52 weeks 52 weeks ended ended ended ended 1 April 2 April 1 October 1 October 2007 2006 2006 2006 unaudited unaudited unaudited audited £'m £'m £'m £'m ______ ______ ______ ______Cash flows from operating activitiesCash generated from continuing operations 25.5 20.1 30.5 50.6Finance income 0.3 - 0.3 0.3Finance and bank loan arrangement fees paid (1.8) (11.1) (16.3) (27.4)Tax refunded/(paid) 1.2 (0.4) (1.2) (1.6) ______ ______ ______ ______ Net cash from operating activities 25.2 8.6 13.3 21.9 ______ ______ ______ ______ Cash flows from investing activitiesPurchase of subsidiary undertakings net of cash (12.2) (77.8) (17.0) (94.8)acquiredSales of subsidiary undertakings 28.0 41.5 6.4 47.9Purchase of property, plant and equipment (14.4) (13.3) (15.8) (29.1)Receipts from the sale of property, plant and 1.2 1.7 2.3 4.0equipment ______ ______ ______ ______ Net cash generated from/(used in) investing 2.6 (47.9) (24.1) (72.0)activities ______ ______ ______ ______ Cash flows from financing activitiesRepayment of borrowings (24.3) (15.9) (316.3) (332.2)New borrowings - 59.2 177.2 236.4Capital element of finance leases - (0.1) (0.1) (0.2)Proceeds from shares issues - - 163.8 163.8Dividends paid (2.1) - - - ______ ______ ______ ______ Net cash (used in)/generated from financing (26.4) 43.2 24.6 67.8activities ______ ______ ______ ______ Net increase in cash and cash equivalents 1.4 3.9 13.8 17.7Opening cash and cash equivalents 21.9 4.2 8.1 4.2 ______ ______ ______ ______ Closing cash and cash equivalents 23.3 8.1 21.9 21.9 ______ ______ ______ ______ Note: Included within the purchase of property, plant and equipment arepurchases of freehold properties totalling £2.2m (2006 - £1.9m), and developmentexpenditure on new properties totalling £5.1m (2006 - £7.1m). 1 General Information The information for the year ended 1 October 2006 does not constitute statutoryaccounts as defined in section 240 of the Companies Act 1985. A copy of thestatutory accounts for that year has been delivered to the Registrar ofCompanies. The auditor's opinion on those accounts was unqualified and did notcontain statements under section 237(2) or (3) of the Companies Act 1985. 2 Accounting Policies The unaudited consolidated financial information has been prepared usingaccounting policies consistent with International Financial Reporting Standards(IFRS) and in accordance with IAS 34 "Interim Financial Reporting". The same accounting policies, presentation and methods of computation areapplied in the unaudited consolidated financial information as disclosed in theGroup's latest audited financial statements on pages 40 to 45. 3 Taxation 26 weeks 26 weeks 26 weeks ended ended ended 1 April 2 April 1 October 2007 2006 2006 £'m £'m £'m ______ ______ ______Current tax- current period 5.4 1.5 (1.8)- prior period - (0.1) 0.2Deferred tax- current period (6.8) (1.5) (2.7)- prior period - - (0.9) ______ ______ ______ Taxation (1.4) (0.1) (5.2) ______ ______ ______ 4 Earnings per Ordinary Share Basic earnings per share is calculated by dividing the profit/(loss) for theperiod attributable to ordinary equity holders of the parent, by the weightedaverage number of ordinary shares outstanding during the period. Diluted earnings per share is calculated by dividing the loss for the periodattributable to ordinary equity holders of the parent, by the weighted averagenumber of ordinary shares outstanding during the period plus the weightedaverage number of ordinary shares that would be issued on the conversion of allthe dilutive potential ordinary shares into ordinary shares. The following reflects the share data used in the basic and diluted earnings pershare calculations and incorporates the impact of the bonus issue made to allshareholders on 5 July 2006. 26 weeks 26 weeks 26 weeks ended ended ended 1 April 2 April 1 October 2007 2006 2006 Number Number Number Basic weighted average number of shares 188,067,377 110,289,690 147,265,920(excluding treasury shares)Dilutive potential ordinary shares:Employee share options - - - ______ ______ ______ Diluted weighted average number of shares 188,067,377 110,289,600 147,265,920 ______ ______ ______ The Group presents exceptional items and future minimum rental increases on theface of the income statement. Items that are considered exceptional, by virtueof their size or incidence, are disclosed in order to improve a reader'sunderstanding of the financial information. To this end, additional basic anddiluted earnings per share information is also presented on this basis.Reconciliations of earnings and the weighted average number of ordinary sharesused are set out below: 26 weeks ended 1 April 2007 Basic Diluted per share per share Earnings amount amount £'m p p ______ ______ ______Profit/(loss) attributable to ordinary 0.8 0.43 0.43shareholdersCharge for future minimum rental increases 19.6 10.42 10.42Exceptional central costs:- Flotation costs - - -- Restructuring, integration, and other costs - - - Taxation impact of above (5.9) (3.13) (3.13) ______ ______ ______Adjusted Earnings 14.5 7.72 7.72 ______ ______ ______ (continued from table above) 26 weeks ended 2 April 2006 Basic Diluted per share per share Earnings amount amount £'m p p ______ ______ ______Profit/(loss) attributable to ordinary (12.3) (11.15) (11.15)shareholdersCharge for future minimum rental increases 8.9 8.07 8.07Exceptional central costs:- Flotation costs - - -- Restructuring, integration,and other costs 1.5 1.36 1.36Taxation impact of above (3.1) (2.83) (2.83) ______ ______ ______ Adjusted Earnings (5.0) (4.55) (4.55) ______ ______ ______ (continued from table above) 26 weeks ended 1 October 2006 Basic Diluted per share per share Earnings amount amount £'m p p ______ ______ ______Profit/(loss) attributable to ordinary 0.2 0.14 0.14shareholdersCharge for future minimum rental increases 21.8 14.80 14.80Exceptional central costs:- Flotation costs 3.1 2.11 2.11- Restructuring, integration,and other costs 0.6 0.41 0.41Taxation impact of above (7.7) (5.19) (5.19) ______ ______ ______ Adjusted Earnings 18.0 12.27 12.27 ______ ______ ______ Note: Adjusted Earnings is Profit attributable to ordinary Shareholders beforecharges for future minimum rental increases and exceptional central costs andtaxation impact thereof. If the existing share capital structure had been in existence for the entireperiod ended 2 April 2006, the adjusted earnings per share figure above wouldhave been 0.7 pence per share. 5 Dividends Paid and Proposed A dividend of 1.1p per share, totaling £2.1m, in respect of the period ended 1October 2006, was paid in this period. No other dividends were declared or paidduring the period. The Directors have declared an interim dividend of 2.5p per share, totalling£4.7m. This financial information does not reflect this dividend. 6 Consolidated Statement of Changes in Shareholders' Equity/(Deficit) Share Share Premium Revaluation Retained Total Capital Account Reserve Deficit Equity £'m £'m £'m £'m £'m ______ ______ ______ ______ ______ At 1 October 2006 1.9 161.5 - (15.4) 148.0Share-based payments - - - 0.7 0.7Revaluation in period - - 0.6 - 0.6Realisation on disposal - - (0.6) 0.6 -Ordinary dividends paid - - - (2.1) (2.1)Profit attributable to ordinary shareholders - - - 0.8 0.8 ______ ______ ______ ______ ______At 1 April 2007 1.9 161.5 - (15.4) 148.0 ______ ______ ______ ______ ______ This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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