Pre-Close Update

Pre-Close Update

Monday 29 March 2010 - Southern Cross Healthcare Group PLC (LSE: SCHE) ('Southern Cross' or the 'Group'), the UK's largest care home operator, issues the following trading update.

On 9 February 2010, Southern Cross issued its interim management statement ("IMS") for the period to 31 December 2009. At that time, the full year outlook was in line with management's expectations albeit that Local Authority price negotiations had not been concluded.

Since the IMS the Group has experienced lower than anticipated average occupancy and Local Authority fee settlements which are below management's previous estimates. Whilst the Group anticipates that the first half will be in line with its expectation, a degree of downside risk exists in the second half of the year which could adversely affect the full year outturn.

Average occupancy for the period 1 October 2009 to 25 March 2010 was 85.7% across the whole group and 87.0% in mature homes. Mature spot occupancy is currently 85.7%. 

The Group had expected that Local Authorities would deliver an average fee growth of at least 2%. Recent discussions and correspondence suggest that fee increases will be around 1% on average. Management action on costs has been taken to partially mitigate the effect of this. Private fee increases were 3.7%.

Meanwhile the Group remains focused on its New Horizons programme which remains on track to deliver the previously specified operational improvements.

The Group will announce its Interim Results on 11th May.

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About Southern Cross

Southern Cross is, in terms of number of beds, the largest UK provider of care home services for the elderly and a major provider of specialist services for people with physical and/or learning disabilities. The Group's care homes for the elderly operate under two distinct brands: Southern Cross Healthcare and Ashbourne Senior Living. Both brands provide a range of social and personal care services and nursing care services for elderly people with physical frailties and differing forms of dementia. The Group's specialist services operate under the Active Care Partnerships brand and provide long-term care services for people with physical and/or learning disabilities and for younger people with complex forms of challenging behaviour.

Southern Cross is focused on providing high quality care in well invested facilities, seeking to be the home of choice in each local community in which it operates. The Group provides care services for most of the local authorities in the UK which, together with the NHS, represent circa 78% of the Group's revenues. Its care home portfolio is largely purpose-built with a high percentage of single occupancy rooms and rooms with ensuite bathrooms.

This announcement includes statements that are, or may deemed to be, "forward looking statements". These forward looking statements can be identified by the use 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 comparable terminology. These forward looking statements include matters that are not historical facts and include statements regarding the Group's intentions, beliefs or current expectations concerning, among other things, the Group's results of operations, financial condition, liquidity, prospects, growth, strategies and the outlook on the care home industry. By their nature, forward looking statements involve risk and uncertainty because they relate to future events and circumstances.