12th May 2008 06:00
RNS Number : 1417U
Southern Cross Healthcare Grp PLC
11 May 2008
Southern Cross Healthcare Group PLC -- Strong results during winter period reflect continuing success of growth strategy -- Monday, 12 May 2008 - Southern Cross Healthcare Group PLC (LSE: SCHE) ('Southern
Cross', the 'Group' or the 'Company'), the UK's largest care home provider,
today announces its interim results for the half year period ended 30 March
2008. Operating Highlights ·; Number of beds increased by 14.4% to 37,084 (2007 - 32,420) ·; Underlying average weekly fee up 6.0% to £515 (2007 - £486) ·; Underlying occupancy 90.4% (2007 - 91.1%) Statutory Financial Highlights ·; Total revenues increased by 28.2% to £431.2m (2007 - £336.3m) ·; Revenue relating to acquisitions up to £20.1m (2007 - £9.0m) with corresponding Home EBITDAR before central costs relating to acquisitions £5.6m (2007 - £2.6m) ·; Interim dividend re-based by 50.0% to 3.75p (2007 - 2.50p) ·; Basic loss per share 3.34p (2007 - profit per share 0.43p) Other Financial Highlights ·; Underlying revenues up 22.2% to £411.1m (2007 - £336.3m) ·; Underlying Home EBITDAR up 25.9% to £123.5m (2007 - £98.1m) ·; Underlying Home EBITDAR margin increased to 30.0% (2007 - 29.2%) ·; Adjusted EBITDA up 41.3% to £30.8m (2007 - £21.8m) ·; Adjusted earnings per share up 15.3% to 6.80p (2007 - 5.90p) ·; Cash inflow from operating activities of £29.5m (2007 - £25.5m) representing cash conversion of Adjusted EBITDA of 95.8% (2007 - 117.0%) ·; New two-year development loan totalling £32m signed and current acquisition facility increased from £60m to £108m Notes Home EBITDAR is defined as earnings before interest, tax, depreciation,
amortisation, profit on disposal of property, plant and equipment and subsidiary
undertakings and rental charges on operating leases. EBITDA is defined as earnings before interest, tax, depreciation, amortisation,
profit on disposal of property, plant and equipment and subsidiary undertakings. Adjusted EBITDA represents EBITDA after adding back charges for future minimum
rental increases. Adjusted earnings per share is defined as earnings before charges for future
minimum rental increases, loan arrangement fees written off, amortisation of
goodwill and the taxation impact thereof, divided by the weighted average number
of shares. Number at the period end. Underlying occupancy excludes immature beds, newly developed homes or
refurbished homes that have been trading for less than 12 months. Rent cover is defined as Home level EBITDAR before central costs divided by
charge for rental amounts currently payable. Underlying revenues and underlying Home EBITDAR excludes acquisitions. Bill Colvin, Chief Executive of Southern Cross, said: "The strong performance in the first half of the year reflects the continuing
success of our growth strategy. Fee increases have been agreed ahead of our
expectations, landlords continue to show interest in financing our properties
and costs remain under control. With many opportunities to improve the quality
of our portfolio, increase market share and with demand for our services
increasing as the UK population ages, we are confident that Southern Cross is
well placed to make further progress which is reflected in the re-basing of our
interim dividend." Chief Executive's Review We continue to pursue our growth strategy through the acquisition of quality
businesses and development of new care centres. This strategy, combined with our
commitment to improve the range and quality of care services within all our
homes, ensures we are well positioned to continue to grow the business in 2008
and beyond. The strong operational results for the winter period reflect the continuing
success of our growth strategy and the performance of our experienced operations
team, led by John Murphy our Group Managing Director. Total revenue growth in the period was 28.2% with an average home occupancy rate
of 89.6%, slightly lower than the previous year due to a larger number of new
home openings adding to the seasonal fall in occupancy over the winter months
which was exacerbated by the "norovirus" that affected the country last winter.
Excluding the impact of immature homes (which are new developments or
refurbished homes that have been trading for less than 12 months) the underlying
occupancy rate was 90.4%, compared with 91.1% for the comparative period of the
prior year. Effective control of running costs and the operational leverage of the business
model translated the revenue growth into Adjusted EBITDA growth of 41.3%. First
half Adjusted EBITDA of £30.8m reflects the normal seasonal pattern of earnings.
This seasonality is caused by higher payroll costs in the first half of our
financial year, due to the timing of National Minimum Wage and public sector pay
announcements, and lower occupancy rates during the winter. The second half is
characterised by historically higher occupancy levels during the summer, annual
fee rate increases predominately in April and minimal underlying cost increases. Rent cover over the winter period has increased to 1.53 times and Adjusted
EBITDA/Net finance costs provides interest cover of over 6.16 times. Expansion of Portfolio The number of beds operated by the Group has grown from 34,304 at 30 September
2007 to 37,084 at 30 March 2008, an increase in bed capacity of 2,780 beds or
8.1%. Details of the bed growth for this period are summarised in the table
below. Homes and Beds as at 30 March 2008: Number of available beds Number of homes Acquired Developed Total As at 30 September 2007 712 36,215
Managed for third parties 39 1,911 ______ ______
Leased/owned 673 34,304 ______ ______
Bondcare 39 1,911 - 1,911
Other acquisitions 12 600 - 600
New developments opened 4 - 269 269 ______ ______ ______ ______
Leased/owned 728 2,511 269 37,084 ______ ______ ______ ______ Our sale and leaseback operating model continues to deliver an acquired "Opco"
for nominal consideration. Together with new developments, that are mainly built
by third parties with our construction partners and then acquired at practical
completion, our capital light model continues to deliver shareholder value. To
facilitate the growth of our new developments we have begun to acquire sites in
our preferred growth areas and hold a small number of developments on our
balance sheet until construction is complete. Development Pipeline During the first half of the year we have completed four new development
projects, adding 269 beds to our portfolio. Subsequent to the period end, we
have announced the opening of two further facilities, with 157 beds, and expect
to add a further 369 beds by the end of the financial year. We continue to seek
new opportunities for the development of new homes and have agreements in place
for 1,150 beds to be delivered between the end of the financial year and
September 2009, with a further 600 beds under negotiation for completion under
the same timetable. Dividends Following the first part year dividend of 5p per share, £9.4m in total, paid on
11 February 2008, the Board has declared an interim dividend of 3.75p per share,
£7.1m in total, to be paid on 20 June 2008, to those shareholders on the
register of members at close of business on 23 May 2008. The payment of the
dividend reflects the cash generative nature of the business, the Board's
confidence in the operating model going forward and its continuing focus on
delivering shareholder value. Board Changes On 1 January 2008 Ray Miles was appointed Chairman and Nancy Hollendoner was
appointed as a Non-Executive Director. William Colvin became Chief Executive on 1 January 2008, following the departure
of Philip Scott at the end of 2007. As previously announced, Graham Sizer resigned as Finance Director of the
Company and was replaced by our Group Financial Controller, Jason Lock on 1
March 2008. Jason has been with the Company since 2003. Staff Our dedicated team of staff, in excess of 40,000 people, across the whole of the
UK, is our greatest asset, and the Board is grateful to them all for their
efforts. Their commitment to providing on-going high standards of health and
social care to our valued residents is at the very core of our business. To
recognise and celebrate their achievements we held our first Care Awards
ceremony in March 2008 with over 300 staff attending, this event was an
outstanding success. The Board congratulates Terry Lilico, the Home Manager
from Coniscliffe Care Centre in Newcastle Upon Tyne, who was the overall winner. The Board will continue to develop a number of staff initiatives that will
reward those personnel who remain committed to our company. Our Home Managers
joined our PSP Scheme (Performance Share Plan) for the first time in January
2008 in recognition of the vital role they play in the future success of the
business. We remain committed to staff training and development and provide career
opportunities for those personnel who wish to remain with the Company for the
long term. Home Inspection Scores September 2007: Excellent 51 Good 410 Adequate 207 Poor 44
March 2008: Excellent 70 Good 416 Adequate 216 Poor 26 The various central government regulatory inspection bodies in England,
Scotland, Wales and Northern Ireland carry out regular announced and unannounced
inspection visits to all care homes in the UK. We are publicly announcing our
summary home ratings inspection scores, across all the Southern Cross Group
homes which have been rated. Since 30 September 2007 the number of homes scored
as "poor" has fallen from 44 to 26, whilst the number of homes scored as "
excellent" has increased from 51 to 70. The Board is pleased with the initial
progress to date and continues with its strategy of reducing the number of homes
in the "red" category to nil, and improving the overall rating of the Group. Outlook The fundamentals of our industry in the UK remain positive. A rapidly ageing
population is increasing demand for quality care services and there is a
continued shortage of high quality purpose built homes, as smaller,
non-compliant homes continue to exit the market. Over 100,000 long term
registered care beds have left the market in the UK since 1996. Our scale is a significant competitive advantage through our access to funding
and dealings with Local Authorities on fee negotiations. This year we have
agreed fee uplifts, to date, for over 85% of our beds in total, resulting in an
average fee increase of approximately 5%, which is ahead of our initial
expectations. This average increase includes private fee increases and the
overall Local Authority increases which are received in October and April each
year. This average fee uplift coupled with our known payroll, rent and home
running cost increases, under a constant occupancy, will enable us to grow our
margins in the second half of the year. Our largest cost element, labour, has
continued to benefit from access to pan European labour markets. In addition, we
have continued to control our other operating costs and leverage our existing
central infrastructure as the Group has expanded. Home running costs during the
period were 13.1% of revenue (2007 - 13.4%) and central costs were 3.4% of
revenues (2007 - 3.6%). With our current rental levels below £5,000 p.a. per bed and annual increases
either fixed or capped, we remain convinced that our funding model works for the
long term, given the growing demographic pressures and increasing demand for
quality residential care and services. We continue to see many opportunities to improve the quality of our portfolio
and increase our market share in this important but highly fragmented industry.
We will achieve this through acquisitions and developments of well located,
modern, purpose-built care facilities across the UK in the many focus regions we
have identified. The Board and all our staff are totally committed to providing the highest
standards of care for all our residents in all our homes. We strive for our
homes to be the preferred care provider and employer in all the local markets
they serve. William Colvin
Chief Executive
12 May 2008 Financial Review Basis of Preparation The financial information on pages 8 to 14 has been prepared using accounting
policies consistent with International Financial Reporting Standards (IFRSs) and
in accordance with IAS 34 "Interim Financial Reporting". In accordance with IFRS
3 "Business Combinations" the balance sheet as at 30 September 2007 has been
restated to reflect finalisation of fair values on provisional goodwill. Trading Activities Over the 26 weeks ended 30 March 2008, significant year on year growth was
recorded with revenue increasing by 28.2% to £431.2m and Adjusted EBITDA by
41.3% to £30.8m. This significant improvement in revenue is primarily a consequence of the impact
of acquisitions made in the second half of the last financial year combined with
the effect of those acquisitions made in the 26 weeks ended 30 March 2008. In
addition, the improvement in underlying Home EBITDAR before central cost margin
from 29.2% to 30.0% is a reflection of effective control of variable costs that
has contributed to an improvement in year on year performance and demonstrates
the operational leverage in the business. A comparison of the underlying trading
performance over the same comparative period is summarised below: Continuing Activities 26 weeks ended 26 weeks ended 30 March 2008 1 April 2007 £'m £'m Underlying Revenue 411.1 336.3
Average occupancy - % 89.6 91.0
Average weekly fee - £ p.w. 515 486
Underlying Home EBITDAR before central costs 123.5 98.1
Underlying Home EBITDAR before central cost margin - % 30.0 29.2 Revenue increased by 22.2% on a like-for-like basis with average weekly fees
increasing by 6.0%. Occupancy of the underlying business excluding the impact of
immature homes was 90.4% during the period. Home EBITDAR before central costs
increased by 25.9%. Rent Total rent for the 26 weeks ended 30 March 2008 increased by £25.5m, relative to
the comparable period for 2007, to £109.7m. The non-cash charge for future
minimum rental increases amounted to £25.4m (2007 - £19.6m). The cash charge for
rent currently payable increased by £19.7m (30.5%) to £84.3m for the 26 weeks
ended 30 March 2008. The increase relates to the increase in average available
beds (22.9%) as well as rental increases period on period. In addition,
acquisitions in the second half of the financial year to 30 September 2007 have
a higher rent charge payable per bed, although still in line with the Group's
standard rent cover policy as a consequence of the greater Home EBITDAR per bed
return. Home EBITDAR before central costs as a multiple of the charge for rent currently
payable improved to 1.53 times for the 26 weeks ended 30 March 2008 (2007 - 1.52
times). Central Costs Central costs for the period increased by £2.3m (18.9%) to £14.5m, including a
£1.5m (2007 - 0.7m) charge relating to the PSP Scheme, compared to central
costs recorded for the 26-week period ended 1 April 2007. The increase in the
level of central costs was less than the 22.9% growth in operational size
(average available number of beds) of the Group, demonstrating the efficiencies
within the central support function. Finance Costs Financing costs increased by £2.5m to £5.2m for the 26 weeks ended 30 March 2008
as a consequence of the higher level of indebtedness drawn to fund acquisitions
in the second half of the last financial year to 30 September 2007 and also
during the current period. Taxation The tax credit on earnings before taxation for the period to 30 March 2008 was
£2.3m (2007 - £1.4m), representing a headline rate of 26.7% (2007 - 233%).
However, this headline rate is affected by goodwill amortisation. The pre-exceptional, pre-goodwill amortisation tax charge under UK GAAP of £5.1m
(2007 - £4.5m) represents an effective tax rate of 24.1% (2007 - 28.8%). The
cause of the variance of the effective rate to the standard rate of corporation
tax in the United Kingdom of 29% (2007 - 30%) is due to utilisation of tax
losses brought forward. (Loss)/earnings per Share Basic loss per share for the period was (3.3)p (2007 - earnings per share of
0.4p). Adjusted earnings per share for the period, before future minimum rental
increase charges, amortisation and the taxation impact thereof, was 6.8p (2007 -
5.9p). The growth in this adjusted earnings per share measure of 15.3% is
consistent with the improvement in operating results. Financing Net debt decreased by £48.3m since 30 September 2007 to £123.6m at 30 March
2008. However, included within this total amount are loans drawn for
acquisitions and developments totalling £76.7m (30 September 2007 - £120.0m).
The facility was drawn specifically for the acquisition of freehold properties
that are presented within property assets held for resale and also to fund
development projects. Net debt excluding development loans was £46.9m, a
decrease of £5m since 30 September 2007. During the period £3m of term loans
were repaid and loan notes amounting to £10.2m were redeemed. During the period the Group negotiated a new development loan facility to fund
the development of six new sites as well as increasing the current acquisition
facility from £60m to £108m, primarily to finance the acquisition of the
Portland Group. Cash Flow 26 weeks ended 26 weeks ended 30 March 2008 1 April 2007 £'m £'m ______ ______
Cash flows from operations 29.5 25.5
Net finance costs and taxation (9.5) (0.3)
Investing activities 51.8 2.6
Financing activities (72.5) (26.4) ______ ______
Net (decrease)/increase in cash and cash equivalents (0.7) 1.4 ______ ______ Net cash inflow from operations was £29.5m (2007 - £25.5m), representing a cash
conversion ratio compared to Adjusted EBITDA of 96% (2007 - 117%). Investing activities in the period generated a cash inflow of £51.8m (2007 -
£2.6m) due primarily to the sale of the Avery portfolio for £94.9m and the
purchase of the Portland Group for £40.4m. The net cash flow in the period of
other acquisitions and freehold property sales was an inflow of £23.9m. Ongoing
capital expenditure amounted to £14.7m (2007 £7.1m) and development expenditure
was £11.9m (2007 - £7.3m). The cash outflow from financing activities was £72.5m (2007 - £26.4m) due to
repayment of bank debt and loan notes, highlighted above, plus a dividend
payment of £9.4m (2007 - £2.1m). Principal Risks and Uncertainties Southern Cross, like all businesses, faces a number of operating risks and
uncertainties. There are a number of risks that could impact the Group's
long-term performance and steps are taken to understand and evaluate these in
order to achieve our objective of creating long-term sustainable returns for
shareholders. We have a risk management process in place, which is designed to identify,
manage and mitigate business risk. Regular reporting of these risks and the
monitoring of actions and controls is conducted by the Audit Committee, which
reports its findings to the Board. The most fundamental risks faced by the Company are: if the Group fails to comply with regulation, regulatory action could include, among other penalties, the revocation of a care home's licence to operate; the Group could suffer severe negative publicity if a serious incident were to occur at one of the Group's care homes; if the average weekly fee increases do not rise at least in line with costs; the Group's ability to grow its business could be adversely affected if suitable acquisition opportunities cannot be found or successfully and profitably integrated; if the Group fails to attract and retain nursing and other qualified staff, it may be unable to provide residents with quality nursing care and may have to reduce the number of beds in its care homes. Jason Lock
Finance Director
12 May 2008 Consolidated Income Statement Note 26 weeks ended 26 weeks ended 52 weeks ended 30 March 2008 1 April 2007 30 September 2007 unaudited unaudited audited £'m £'m £'m ______ ______ ______
Revenue 431.2 336.3 731.9
Home payroll costs (245.6) (192.9) (409.0)
Home running costs (56.5) (45.3) (92.7) ______ ______ ______
Home EBITDAR(1) before central costs 129.1 98.1 230.2
Rent
Charge for rental amounts currently payable (84.3) (64.6) (138.9)
Charge for future minimum rental increases (25.4) (19.6) (43.5) ______ ______ ______
Total rent (109.7) (84.2) (182.4) ______ ______ ______
Home EBITDA(2) before central costs 19.4 13.9 47.8
Central costs (14.5) (12.2) (26.0)
Other operating income 0.5 0.5 1.5 ______ ______ ______
Adjusted EBITDA(3) before charge for future
minimum rental increases 30.8 21.8 66.8
Charge for future minimum rental increases (25.4) (19.6) (43.5) ______ ______ ______
EBITDA 5.4 2.2 23.3
Profit on disposal of property, plant and
equipment and subsidiary undertakings - 1.6 0.8
Depreciation (8.2) (6.0) (13.2)
Amortisation (0.8) 3.4 1.0 ______ ______ ______
Operating (loss)/income (3.6) 1.2 11.9
Finance costs (5.2) (2.7) (10.2)
Finance income 0.2 0.9 1.3 ______ ______ ______
(Loss)/profit before taxation (8.6) (0.6) 3.0
Taxation credit/(charge) 4 2.3 1.4 (1.1) ______ ______ ______
(Loss)/profit attributable to ordinary shareholders (6.3) 0.8 1.9 ______ ______ ______ Note Pence per share Pence per share Pence per share
(Loss)/earnings per share attributable to equity
shareholders
Basic and diluted 5 (3.34) 0.43 0.96 ______ ______ ______ (1) Home EBITDAR is defined as earnings before interest, tax, depreciation,
amortisation, profit on disposal of property, plant and equipment and subsidiary
undertakings and rental charges on operating leases. (2) EBITDA is defined as earnings before interest, tax, depreciation,
amortisation and profit on disposal of property, plant and equipment and
subsidiary undertakings. (3) EBITDA represents EBITDA after adding back the charge for future minimum
rental increases. All of the above activities relate to continuing operations. The notes form part of this financial information. Consolidated Balance Sheet As at As at As at 30 March 2008 1 April 2007 30 September 2007- unaudited unaudited restated audited Note £'m £'m £'m ______ ______ ______
ASSETS
Non-current assets
Property, plant and equipment 115.1 95.8 93.4
Goodwill 211.1 196.4 207.6
Other intangible assets - 1.6 0.8
Deferred tax assets 32.3 19.9 25.1
Other non-current assets 3.1 2.6 3.0 ______ ______ ______
Total non-current assets 361.6 316.3 329.9 ______ ______ ______
Current assets
Cash and cash equivalents 14.2 23.3 14.9
Trade receivables 40.0 30.4 40.3
Inventories 2.4 1.6 2.1
Property assets held for sale 77.1 - 143.8
Other current assets 13.5 11.1 7.8 ______ ______ ______
Total current assets 147.2 66.4 208.9 ______ ______ ______
Total assets 508.8 382.7 538.8 ______ ______ ______
LIABILITIES
Current liabilities
Short-term financial liabilities (86.0) (5.8) (134.7)
Trade and other payables (95.3) (75.5) (88.0) ______ ______ ______
Total current liabilities (181.3) (81.3) (222.7) ______ ______ ______
Non-current liabilities
Long-term financial liabilities (50.9) (62.7) (51.5)
Provisions and similar obligations (11.0) (7.4) (11.3)
Deferred government grants (2.4) - (1.3)
Future minimum rental payable (132.6) (83.3) (107.2) ______ ______ ______
Total non-current liabilities (196.9) (153.4) (171.3) ______ ______ ______
Total liabilities (378.2) (234.7) (394.0) ______ ______ ______
Net assets 130.6 148.0 144.8 ______ ______ ______
Ordinary shares 1.9 1.9 1.9
Share premium 161.5 161.5 161.5
Retained deficit (32.8) (15.4) (18.6) ______ ______ ______
Shareholders' equity 130.6 148.0 144.8 ______ ______ ______ The notes form part of this financial information. Consolidated Cash Flow Statement Note 26 weeks 26 weeks 52 weeks ended ended ended 30 March 1 April 30 September 2008 2007 2007 unaudited unaudited audited £'m £'m £'m ______ ______ ______
Cash flows from operating activities
Cash flows from operations 29.5 25.5 70.3
Interest received 0.3 0.3 0.4
Interest and bank loan arrangement fees paid (3.7) (1.8) (9.5)
Tax (paid)/refunded (6.1) 1.2 (4.3) ______ ______ ______
Net cash from operating activities 20.0 25.2 56.9 ______ ______ ______
Cash flows from investing activities
Purchase of subsidiary undertakings net of cash (47.8) (12.2) (56.6)
acquired
Sale of subsidiary undertakings 130.3 28.0 72.6
Purchase of property, plant and equipment (30.8) (14.4) (69.9)
Receipts from the sale of property, plant and 0.1 1.2 15.4
equipment ______ ______ ______
Net cash generated from/(used in) investing 51.8 2.6 (38.5)
activities ______ ______ ______
Cash flows from financing activities
Repayment of borrowings (160.6) (24.3) (258.0)
New borrowings 97.7 - 239.8
Capital element of finance leases (0.2) - (0.4)
Dividends paid 6 (9.4) (2.1) (6.8) ______ ______ ______
Net cash used in financing activities (72.5) (26.4) (25.4) ______ ______ ______
Net (decrease)/increase in cash and cash equivalents (0.7) 1.4 (7.0)
Opening cash and cash equivalents 14.9 21.9 21.9 ______ ______ ______
Closing cash and cash equivalents 14.2 23.3 14.9 ______ ______ ______ Note: Included within the purchase of property, plant and equipment are
purchases of freehold and leasehold properties totalling £4.2m (2007 - £2.2m)
and development expenditure on new properties totalling £11.9m (2007 - £5.1m).
Excluding these amounts, expenditure on the underlying portfolio amounted to
£14.7m (2007 - £7.1m). Consolidated Statement of Changes in Shareholders' Equity Share capital Share Retained Total premium deficit equity account £'m £'m £'m £'m ______ ______ ______ ______
At 1 October 2007 1.9 161.5 (18.6) 144.8
Share-based payments - - 1.5 1.5
Ordinary dividends paid - - (9.4) (9.4)
Loss attributable to ordinary shareholders - - (6.3) (6.3) ______ ______ ______ ______
At 30 March 2008 1.9 161.5 (32.8) 130.6 ______ ______ ______ ______ Share Share Revaluation Retained Total capital premium reserve deficit equity account £'m £'m £'m £'m £'m ______ ______ ______ ______ ______
At 2 October 2006 1.9 161.5 - (15.4) 148.0
Share-based payments - - - 0.7 0.7
Revaluation in period - - 0.6 - 0.6
Realisation 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 ______ ______ ______ ______ ______ Notes to the financial information
For the 26 weeks ended 30 March 2008 1. General Information These interim financial results do not comprise statutory accounts within the
meaning of Section 240 of the Companies Act 1985. Statutory accounts for the 52
weeks ended 30 September 2007 were approved by the Board of directors on 10
December 2007 and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified, did not contain an emphasis of
matter paragraph and did not contain any statement under Section 237 of the
Companies Act 1985. 2. Basis of preparation This condensed consolidated half-yearly financial information for the 26 weeks
ended 30 March 2008 has been prepared in accordance with the Disclosure and
Transparency Rules ("DTR") of the Financial Services Authority and with IAS 34,
'Interim financial reporting' as adopted by the European Union. The half-yearly
condensed consolidated financial report should be read in conjunction with the
annual financial statements for the 52 weeks ended 30 September 2007, which have
been prepared in accordance with IFRSs as adopted by the European Union. 3. Accounting Policies The accounting policies adopted are consistent with those of the annual
financial statements for the 52 weeks ended 30 September 2007. 4. Taxation 26 weeks ended 26 weeks ended 30 March 1 April 2008 2007 £'m £'m ______ ______
Current tax
- Current period 4.5 5.4
- Prior period - -
Deferred tax
- Current period (6.8) (6.8)
- Prior period - - ______ ______
Taxation (credit)/charge (2.3) (1.4) ______ ______ The tax credit for the 26-week period ended 30 March 2008 is lower than the
average standard rate of corporation tax in the United Kingdom (29%) (2007 -
30%), due to the impact of non-deductible goodwill amortisation. 26 weeks ended 26 weeks ended 30 March 1 April 2008 2007 £'m £'m ______ ______
(Loss)/profit before taxation (8.6) (0.6)
(Loss)/profit before taxation multiplied by the average standard rate of
corporation tax in the United Kingdom of 29% (2007 - 30%) (2.5) (0.2)
Effect of:
- Amortisation of intangibles 0.2 (1.0)
- Expenses not deductible for tax purposes 0.1 (0.2)
- Rate differences - -
- Other (0.1) - ______ ______
Tax (credit)/charge for the period (2.3) (1.4) ______ ______ The tax charge is expected to be lower than the standard rate in future periods,
as the impact of non-deductible intangibles and depreciation is expected to be
outweighed by benefits from the use of tax assets, including brought-forward
losses and capital allowance pools. 5. (Loss)/earnings per Ordinary Share Basic earnings per share is calculated by dividing the (loss)/profit for the
period attributable to ordinary equity holders of the parent, by the weighted
average number of ordinary shares outstanding during the period. Diluted earnings per share is calculated by dividing the (loss)/profit for the
period attributable to ordinary equity holders of the parent, by the weighted
average number of ordinary shares outstanding during the period plus the
weighted average number of ordinary shares that would be issued on the
conversion of all the dilutive potential ordinary shares into ordinary shares. 26 weeks ended 26 weeks ended 30 March 2008 1 April 2007 Number Number Basic weighted average number of shares (excluding treasury shares) 188,067,377 188,067,377
Dilutive potential ordinary shares:
Employee share options - - ____________ ____________
Diluted weighted average number of shares 188,067,377 188,067,377 ____________ ____________ The Group presents future minimum rental increases on the face of the income
statement. Furthermore, amortisation charges on intangible assets relate to
resident contracts acquired through business combinations and amortisation
credits relate to negative goodwill acquired through business combinations, both
of which are considered to be significant non-cash items. To this end,
additional basic and diluted earnings per share information is also presented on
this basis. Reconciliations of earnings and the weighted average number of
ordinary shares used are set out below: 26 weeks ended 30 March 2008 Earnings Basic per Diluted per share amount share amount £'m p p ______ ______ ______
(Loss)/profit attributable to ordinary shareholders (6.3) (3.34) (3.34)
Charge for future minimum rental increases 25.4 13.52 13.52
Amortisation 0.8 0.41 0.41
Taxation impact of above (excluding amortisation) (7.1) (3.79) (3.79) ______ ______ ______
Adjusted measure(1) 12.8 6.80 6.80 ______ ______ ______ (Continued from table above) 26 weeks ended 1 April 2007 Earnings Basic per Diluted per share amount share amount £'m p p ______ ______ ______ (Loss)/profit attributable to ordinary shareholders 0.8 0.43 0.43 Charge for future minimum rental increases 19.6 10.42 10.42
Amortisation (3.4) (1.82) (1.82)
Taxation impact of above (excluding amortisation) (5.9) (3.13) (3.13) ______ ______ ______
Adjusted measure(1) 11.1 5.90 5.90 ______ ______ ______ (1) Profit attributable to ordinary shareholders before charge for future minimum
rental increases, amortisation and taxation impact thereof. 6. Dividends Paid and Declared A dividend of 5p per share, totalling £9.4m, in respect of the 52-week period
ended 30 September 2007, was paid on 11 February 2008. No other dividends were
declared or paid during the period. The directors have declared an interim dividend of 3.75p (2007 - 2.5p) per
share, totalling £7.1m (2007 - £4.7m). This financial information does not
reflect this dividend.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DKLFBVEBBBBE
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