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Southern Cross - Rapidly paying down debt

June 2009

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.

  • Epic Code:
  • SCHE
  • Price:
  • 127p
Results for the six months to 29 March were very well received with the shares rising from 100p to 130p. Results showed that revenues were up by 7% to £461m, thanks to a 4% increase in the number of available beds to 37,575 and also 4% higher average weekly fees of £536. As we have mentioned previously, mature homes are stable businesses as they attract a local catchment area and mature home margins are a function of three things - occupancy rates, weekly fee increases and cost base inflation.  As we said when we reviewed the shares last October, the big swing factor to results is occupancy levels. Like hotels, the occupancy rate of a given facility (beds occupied in relation to those available) is critical to financ ...

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Related Articles

Southern Cross (September 2009)
Southern Cross - Could eliminate debt (March 2009)
Southern Cross - Sale and leaseback of 16 homes (September 2008)
Southern Cross Healthcare - IMS later this month (August 2008)

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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