PRE-CLOSE TRADING UPDATE AND BOARD CHANGE

Thursday, 9 October 2008 - Southern Cross Healthcare Group PLC (LSE: SCHE) ('Southern Cross', the 'Company' or the 'Group'), the UK's largest care home operator, today provides a pre-close trading update following the end of the Company's financial year on 28 September 2008.

• Mature home occupancy rate, as at 28 September 2008, 90.5% 

• Total number of available beds 37,425

• Sale of freehold interests in 16 residential care homes, during August and September, for £51.8m; discussions with potential purchasers regarding further freehold sales continuing

• Borrowings under B1 and B2 facilities reduced to £33.4m; discussions regarding long term bank financing progressing and currently scheduled to be resolved by end October

Occupancy

Current occupancy in the Company's mature homes is 90.5%. Including immature beds (new developments or refurbished homes that have been trading for less than 12 months), the occupancy rate is currently 89.9%.

Expansion of bed portfolio

In this financial year, the Group has added a net 62 homes and 3,120 beds, an increase in bed capacity of 9%.

• Acquired 59 homes with a total of 2,907 beds

• Opened 3 homes with a total of 213 beds from the organic development pipeline

At the year end, the Group operated 735 homes with a total of 37,425 beds. 

Freeholds

Southern Cross has sold the freehold interests in 16 homes during the second half of the financial year for a total of £51.8m. Discussions are continuing with potential purchasers regarding further freehold interests to be sold.

Loan facilities

On 30 June 2008, the Group announced that it was in discussions with its banking syndicate concerning an extension to its loan facilities which would enable it to pursue the sale of certain property assets and/or suitable amendments to its overall longer term debt finance.   

On 25 July 2008, Southern Cross announced that it had agreed an extension of its current loan facilities until 30 October 2008.  The discussions with the banking syndicate are progressing and debt finance arrangements are currently scheduled to be resolved by the end of October.

Trading

The preliminary results for the 52 weeks ended 28 September 2008 will be announced on Tuesday 9 December 2008. The Company expects the full year Adjusted EBITDA to be consistent with previous guidance.

Board Change

Further to its announcement on 4 September 2008, Southern Cross announces that the Board accepted Bill Colvin's resignation from the Company on 8 October 2008. The Board is actively continuing its search for a new Chief Executive. Until such appointment is made, Ray Miles, Chairman of the Board, will assume executive responsibility for the Company.

Enquiries: 

About Southern Cross

Southern Cross is, in terms of number of beds, the largest UK provider of care home services for the elderly and a major provider of specialist services for people with physical and/or learning disabilities. The Company's care homes for the elderly operate under two distinct brands: Southern Cross Healthcare and Ashbourne Senior Living. Both brands provide a range of social and personal care services and nursing care services for elderly people with physical frailties and differing forms of dementia. The Company's specialist services operate under the Active Care Partnerships brand and provide long-term care services for people with physical and/or learning disabilities and for younger people with complex forms of challenging behaviour.

Southern Cross is focused on providing high quality care in well invested facilities, seeking to be the home of choice in each local community in which it operates. The Company provides care services for most of the local authorities in the UK which, together with the NHS, represent circa 70% of the Company's revenues. Its care home portfolio is largely purpose-built with a high percentage of single occupancy rooms and rooms with ensuite bathrooms.  

This announcement includes statements that are, or may deemed to be, "forward looking statements". These forward looking statements can be identified by the use 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 comparable terminology. These forward looking statements include matters that are not historical facts and include statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and the outlook on the care home industry. By their nature, forward looking statements involve risk and uncertainty because they relate to future events and circumstances.

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