Partner Article

Southern Cross forecasts difficult period

North East care home operator Southern Cross today predicted tougher times ahead on the back of lower occupancy rates and lower than expected local authority fee settlements.

The Darlington-headquartered group, which is the UK’s largest care home operator, said the average occupancy rate between 1 October 2009 to 25 March 2010 was 85.7% across the whole group and 87.0% in mature homes.

Meanwhile the Group had expected that Local Authorities would deliver an average fee growth of at least 2%.

However, according to a trading statement issued this morning, recent discussions and correspondence suggest that fee increases will be around 1% on average.

The trading update said: “Since the IMS [interim management statement in December 2009] 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.”

Southern Cross also its New Horizons programme remains on track to deliver the previously specified operational improvements.

The company saw its revenues rise in the last three months of 2009, but earnings fell as the company incurred over £1m of upgrade costs.

The firm’s turnover increased by 3.1% to £248.3m over the period on the previous year, while earnings dropped from £15m to £14.9m.

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

This was posted in Bdaily's Members' News section by Ruth Mitchell .