Southern Cross Healthcare Group, the nursing home operator, shocked the City yesterday with a profits warning along with the departure of its finance director.
Southern Cross, whose shares closed down 58.5 per cent at 130p, said occupancy levels at its homes had not grown by as much as it originally expected and trading was unlikely to improve sufficiently for it to meet its previous forecast.
The company said adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) were unlikely to exceed £80m for the year to September 30, against £66.8m the year before.
The group said Finance Director Jason Lock was leaving with immediate effect and would be replaced by Richard Midmer, who previously held the same post at NHP. Midmer is Southern Cross’s third finance director in less than 12 months after Graham Sizer quit late last year.
The company said it had been given a four week extension – to July 28 – by its banks to pursue a sale of property assets to cover the repayment of one of its banking facilities. The £46m facility had been due for repayment on June 30.
Southern Cross said it had received indicative offers in relation to some of these assets.
Worries about the care home operator first surfaced late last year when Philip Scott, chief executive, quit to be followed by Mr Sizer. This was followed by negative media coverage.
In its trading statement Southern Cross says that occupancy levels had increased but not enough to meet expectations.