4th Oct 2007 07:01
Southern Cross Healthcare Grp PLC04 October 2007 PRESS RELEASE BOARD CHANGES AND TRADING UPDATE Thursday, 4 October 2007 - Southern Cross Healthcare Group PLC (LSE: SCHE)('Southern Cross' or the 'Company'), the UK's largest care home operator, todayannounces that Bill Colvin, Non-Executive Chairman, has been appointed ChiefExecutive of the Company with effect from 1 January 2008, replacing Philip Scottwho has informed the Board that, after six years of service, he wishes to stepdown from his position in order to pursue personal interests. Southern Cross also provides a pre-close trading update today following the endof the Company's financial year on 30 September 2007. • Underlying occupancy rate up to 92.3% (2006: 91.6%) • Bed capacity increased by 7,298 beds (up 25%) • Contracts exchanged for £95.5m sale and long-term leaseback of 15 freehold care home properties acquired as part of the Avery transaction • Full year results expected to be at least in line with Board's expectations • Trading environment remains favourable • Strong continuing growth anticipated, with 2008 development pipeline in place and further consolidation opportunities There will be a conference call for analysts and investors today at 9.30a.m.Please call Claire Rowell at Financial Dynamics for dial-in details on +44(0)207269 7285 or email her at [email protected]. Board Changes Bill Colvin, who has been Non-Executive Chairman of Southern Cross since March2005, will be appointed as Chief Executive from 1 January 2008. Formerly the CEOof NHP plc, the care home property investment group, prior to its sale toBlackstone in 2005, he has contributed substantially to the Southern Crosssuccess story over the last two years and is well placed to lead its provenmanagement team and continue its growth strategy. Philip Scott has been Chief Executive of Southern Cross since February 2002 andhas presided over a period of substantial growth for the Company during itsownership by Blackstone and latterly as a public company, following theCompany's successful IPO. The Board of Southern Cross would like to place onrecord its gratitude to Philip for his outstanding leadership of the Companythrough such an important phase of the Company's development and wishes him wellfor the future. In conjunction with this management change, the Board of Southern Cross is alsopleased to announce the appointment of Ray Miles, currently the SeniorIndependent Director of Southern Cross, as its new Non-Executive Chairman. Rayhas spent most of his career in the shipping and transport industry and from1988 until 2005 was Chief Executive of CP Ships Limited. In addition, he is theDeputy Chairman of International Personal Finance plc and an Advisory Directorof Stena AB. As a consequence of these changes, the Board intends to appoint anotherNon-Executive Director in the coming months. Commenting on the changes to the Board, Ray Miles said: "We are delighted that Bill has accepted the role of Chief Executive at thisexciting time in Southern Cross' development. We are confident his knowledge ofthe healthcare services market will help drive the Company's growth strategyforward. We are very grateful to Philip for his contribution and leadership andwish him well with his future plans." Trading Update Following another successful year, the Board of Southern Cross is pleased toreport that the trading environment remains favourable and the full year resultswill be at least in line with our expectations. Occupancy Current occupancy rates remain steady at 91.0% across the Group, reflecting thenumber of new beds opened. Excluding these immature beds (new developments orrefurbished homes that have been trading for less than 12 months), the occupancyrate in the mature business in the seasonally stronger second half of thefinancial year has improved to 92.3% (2006: 91.6%). Expansion of bed portfolio In this financial year, the Group has added a net 132 homes and 7,298 beds, anincrease in bed capacity of 25%. • Acquired 93 homes with 4,840 beds; • Entered into management agreements for 39 homes with 1,911 beds; • Opened 15 homes and 807 beds from the organic development pipeline; • Sold 6 homes with 260 beds that had been acquired as part of portfolio deals, which did not fit the Southern Cross model. The integration of the acquisitions is complete and the acquired businesses andnewly opened homes are all trading well. The Group now operates 712 homes and36,215 beds. Future growth The care home sector in the UK remains highly fragmented, and despite thesignificant growth in our business this year, we still have just an 8% marketshare. There are numerous opportunities to continue to consolidate the sectorand add to our bed capacity with acquisitions of high quality, modern, purposebuilt care homes. The flexibility of our model has been highlighted by therecent transactions that we have undertaken and we expect to be able to continueto make similar bolt- on acquisitions for the foreseeable future. We alsoexpect to deliver a further 1,200 new beds from our 2008 development pipelinewhich is now in place. Further divestment of real estate The Company also announces today that it has exchanged contracts for the sale of15 freehold care home properties acquired as part of the Avery transaction. Theproperties have the benefit of 30 year operating leases on Southern Cross'standard term. The consideration of £95.5m equates to the enterprise valueoriginally paid for the Avery business. The purchaser of the real estate is anew landlord funding stream, which is committed to the healthcare space andseeking longer term arrangements for delivery of beds over the next 4 to 5years. The preliminary results for the 52 weeks ended 30 September 2007 will beannounced on Monday 10 December 2007. Enquiries: Southern Cross Healthcare Group PLC +44 (0)1325 351100Philip Scott, Chief ExecutiveGraham Sizer, Finance Director Financial Dynamics +44 (0)20 7831 3113Deborah Scott/David Yates 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 core elderly segment are consistently in excess of 90%. This announcement includes statements that are, or may 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. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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