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Southern Cross - Shock profit warning

August 2008

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

Care home operator Southern Cross produced a shocking profit warning, which it blamed on two main bug bears: an expected fall in occupancy and problems with refinancing bank debt. The combination of residents dying more often than usual (which it calls higher attrition) as well as central government funding to local authorities coming in later than usual has led to lower occupancy. Given the firm's high fixed cost base this will lead to a significant shortfall in profits and means adjusted EBITDA is unlikely to exceed Â£80m for the current year to 30 September, compared to Â£66.8m last year. The other problem is that it has been unable to repay a tranche of Â£46m of debt originally due for repayment on 30 June and which relates to ...

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Salamander

Majestic Wine

Southern Cross - Fee rises support margins (October 2009)

Southern Cross - Portfolio constituent hits six-month high (June 2009)

Southern Cross - With debt concerns almost eliminated the shares look cheap on PE of 4.3 (April 2009)

Southern Cross - Dramatic recovery in finances means care homes operator looks over-sold (March 2009)

Southern Cross (October 2008)

Southern Cross - 5.8% increase in fees (July 2008)

Southern Cross (April 2008)

Southern Cross - Underlying occupancy over 92% (November 2007)

Southern Cross - Divests freehold for Â£30m (October 2007)

Southern Cross (July 2007)

Southern Cross (June 2007)

Southern Cross (May 2007)

Southern Cross - Blackstone exit triggers re-rating (April 2007)

Southern Cross (February 2007)

Southern Cross - Largest provider of care homes exhibits strong demand profile (November 2006)

With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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Southern Cross - Shock profit warning

August 2008

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