Southern Cross Healthcare Group

Southern Cross Healthcare, Britain’s leading care home services provider, is raising £13.3m through asset sales to reduce borrowings.

The fully listed company says it has finished a £4.8m sale and long-term leaseback deal on its Carnbroe Care Home in Scotland with Umber Properties and a similar £4.8m deal for another care home in Taunton. In addition Southern Cross has sold the business and certain assets of its Sunchoice distribution division, which provides the group’s care homes with laundry, patient handling equipment, staff uniforms and medical items, to Medline Europe for £3.7m.

The company, which dismayed the City last year by defaulting on a banking covenant not long after making bullish expansionist statements and after significant share sales by its previous boss and other directors at prices much higher than recent levels, has been making progress under present chief executive Jamie Buchan. In the 14 weeks to 5 July, revenues and fees showed modest increases, though earnings and occupancy rates were slightly lower.

Southern Cross should continue to advance and, though the shares have rallied strongly since 2008’s 47.75p low, they remain only a fraction of their pre-crisis peak of 634.5p. However, they have risen strongly since Growth Company Investor highlighted them last October and cautious investors should consider partial profit taking, while retaining a chunk for potential further growth.