18 Aug 2008 07:00
| 18 August 2008 |
Care UK Plc
("Care UK" or "the group")
Interim Management Statement
Care UK Plc, the leading health and social care provider, issues the following Interim Management Statement as required by the UK Listing Authority's Disclosure and Transparency Rules. This statement covers the period from 1 April 2008 to date.
Since the release of the group's half yearly results on 19 May, good progress has been maintained and the group's current trading and expectations for the remainder of the financial year are in line with the group's forecasts. In addition, the acquisition of the 50% interest in Partnership Health Group ("PHG") not previously owned by the group was completed on 1 August 2008.
Social Care
We have continued to see good progress in Residential Care with occupancy and pricing at satisfactory levels.
A new purpose built 84-bed care home has been approved for development in Timperley, Cheshire targeted at the premium self-pay market. Outline planning permission has been granted for this project and detailed planning consent is expected shortly. The pipeline for further new developments of care homes for older people remains good.
We are continuing to explore the possibility of creating a property company structure in order to establish a vehicle to facilitate future greenfield developments in Residential Care. The prevailing uncertain conditions in the property market may result in this project being postponed. In the meantime, we are continuing to review future projects on an individual leasehold basis.
The Community Care business has, as previously reported, been impacted by the costs of additional holiday entitlements arising under the Work and Families Act 2006. Community Care has also incurred a higher and more prolonged level of operational start-up costs than expected on certain new contracts, which will impact margin in the second half of the current financial year.
We have recently won a number of new contracts in homecare, amounting to over 5,000 hours per week. Once the current operational start-up challenges referred to above are fully resolved, we expect to make continued good progress within this market.
Specialist Care has continued to maintain a steady performance in line with the half yearly result reported in May 2008.
Since May 2008, when the Commission for Social Care and Inspection ("CSCI"), the regulatory body for social care in England, adopted a new rating system for all services, Care UK has voluntarily published the ratings for all of its services on the group's website. These show continuing improvement in the group's service standards.
Health Care
The trading performance in Health Care continues to be well ahead of the prior year in all areas and, in aggregate, is exceeding our expectations.
The implementation of major new projects in Manchester and Southampton is progressing as planned and operational performance across the Health Care business as a whole continues to be good. In particular, levels of patient satisfaction and clinical outcomes continue to be excellent. Performance at the Sussex Orthopaedic Treatment Centre has further improved during the period and we continue to make progress towards consistently attaining contracted activity levels.
Full ownership of PHG has been well received both by customers and by PHG's management and staff. The process of integrating PHG with the existing Care UK Health Care business has commenced.
Discussions have commenced with a number of the commissioning PCTs, as well as the Department of Health ("DoH"), in relation to the continuity of Wave 1 Independent Sector Treatment Centres ("ISTCs") beyond their initial contracted periods. Whilst still at an early stage, we are encouraged by the positive disposition and the evident interest in determining mutually agreeable terms for continuity.
The pipeline for primary care opportunities is strong. Most notably, the procurement by the NHS of 150 health centres and 100 primary care practices under the 'Equitable Access To Primary Medical Care Services' initiative is well underway, albeit the first phase of opportunities is quite fragmented and individual projects are relatively small. We have pre-qualified on a number of these projects and are currently in the process of submitting full bids.
Negotiations continue with the DoH for compensation arising from the cancellation of the West Midlands diagnostics contract. Compensation claims have also been submitted to the DoH for abortive bid and development costs where the Department have either withdrawn or substantially changed Wave 2 ISTC contracts for which the group was appointed preferred bidder.
Financing
As at 31 July 2008 the group's net debt was c£159m compared with £156m at 31 March 2008. Net debt at 31 July 2008 does not include the acquired net debt within PHG as this transaction was completed on 1 August 2008. The acquired net debt within PHG was approximately £25m, as expected. The combined group has total funding headroom of approximately £84m, including surplus cash, and remains comfortably within its bank covenant requirements.
Prospects
The group anticipates that current year performance will be in line with the Board's expectations and the Board continues to be confident about the outlook for the full year. We remain optimistic that the growth prospects across both the health and social care markets continue to be attractive.
- Ends -
For further information, please contact:
| Care UK Plc | 01206 752552 |
| Mike Parish, Chief Executive | |
| Paul Humphreys, Finance Director |
| Weber Shandwick Financial | 020 7067 0700 |
| Louise Robson or Stephanie Badjonat | |