-3x Short China Discussion Threads

[b1llyboy] 23/6/2011 00:26

Southern cross will update markets on financial restructuring in July................

Dilnot report is due Monday July 4th.

Dilnot will reinforce the privately funding of future care,with pricing restructuring linked with level of individual care (increase of dementia patients & long term NHS bed occupancy= more business).

The recommended financial restructuring of SCHE by it's bankers will be influenced by the recommendations of the dilnot report. Signalling a new era in the fundamental delivery and payment of elderly care.
The dilnot report will deliver strong recommendations of a gradual phase in of private insurance policy as the bedrock of future funding for care of the elderly.

You read it here first.

[mavverick] 22/6/2011 13:24

'Reports in the weekend newspapers claimed that five Southern Cross homes had been reclaimed by one of its 80 landlords. The property company cited, Zest, is part-owned by former Southern Cross chief Phillip Scott.

A spokesman for Southern Cross said they could not confirm or deny the report.'

[mavverick] 22/6/2011 08:43

sorting the variations in provision (as opposed pretty much to diversity) nationally seems a good starting point..interesting posts BB

[b1llyboy] 22/6/2011 00:13

I hope the previous links provide some insight to the myriad of complexities that is care of the elderly.

The links are from intellectuals providing solutions to the government, regarding the future of care.Many short term solutions, to the penultimate commercial business....the extension and preservation of life.(we are all made of the same stuff)

Private finance/investment in the care of human beings(a subject dear to us all)eventually)is a fact of modern life,how we regulate and control these prime movers are the responsibility of every man and woman.

[b1llyboy] 22/6/2011 00:01

Future...............

Analysis...Evidence.......Policy

[mavverick] 21/6/2011 23:00

thanks BB

Not sure what planet Tim Care is on! (Or by deduction his employer)

Beresford has come to the same view (8249) that councils could end up involved

Lloyd makes some reasoned (visionary) options

whose was the late buy?

[b1llyboy] 21/6/2011 22:07

Visionary..........

[b1llyboy] 21/6/2011 22:02

From someone close to the situation............

[b1llyboy] 21/6/2011 21:53

Some level headed analysis..........

[mavverick] 21/6/2011 20:53

a 3.5 million late buy

[b1llyboy] 21/6/2011 19:26

LE......

Rose tinted spectacles.

[lej2] 21/6/2011 19:10

One of the major flaws in the business model is the bad press that the big groups attract. An incident rate of just 0.1 % per annum is over 30 bad news stories each year, which gives so much bad PR that many self funders avoid SC like the plague.

Four Seasons failed without any help from landlords exorbitant rents.

There are small groups of care homes, not specialist in any way, who have occupancy rates in the 92% to 96% range, with high (50% +) self funders making a very nice profit. The homes must offer a quality service and must continually keep properties and furnishings maintained to a high standard. Above all they cannot be institutionalised and must be individual with caring, well trained staff. Not easy to do with a big group of homes.

[b1llyboy] 21/6/2011 18:55

Significant financial concessions by LL's.

[b1llyboy] 21/6/2011 18:50

Also interesting............

[mavverick] 21/6/2011 17:48

yes billyboy it was..and talks with a number of different care providers but the talks seem to have gone stale. There have also been other more obvious SC red herrings such as respite care.

Personally i dont see room to cut too much of a deal with the nhs in dementia care (maybe more room for intermediate care deals) but private payers is an altogether different story if SC can get the quality up to a better and consistent standard.
As Warwick says high occupancy (with a tranche of self funders)is where the profit is. I wouldnt rule out negotiating clauses to give options to buy back the/some freeholds, now or in the future, if they have a backer as this would make the margins much more enticing going forward long term and would please the market. If the business model is fundamentally flawed then sticking paper wont work medium term, but the market will not recognise that!

[b1llyboy] 21/6/2011 17:36

Interesting take.

[b1llyboy] 21/6/2011 17:27

Pal of mine who owns the company that supply SCHE with management software and on-line maintenance package himself a share holder.SCHE were looking to tap a new market of long term dementia NHS patients to free up NHS beds and would be funded directly from the NHS.He thought that along with attracting private payers would form the basis of a new business model,with better income streams as the cost of looking after patients with dementia are more per head by the NHS.

But of course any direction in business modelling would require the proposed restructuring to agreed.

This was discussed many months ago,when LA occupancy began to fall,and fee's were being reduced.

Another 3.5m @17:04 for 7.9697 looks like a buy from the price.

Probably be another holding RNS.

[essentialinvestor] 21/6/2011 17:24

And they all lived happily ever after..

[warwick69] 21/6/2011 17:07

Mav you are right they need to have more high occupancy as this is clearly where the profit margins are made up. Should be a simple business model keep rent and costs down and maintain high occupancy to create a surplus of income over expenditure.

Then they will need to build up a war chest of reserves to have better reserves to fend off further dificulties when occupancy rates fall.

There also needs to be a realisation from Local Government that they cant avoid having to pay to get people care at good standard.

[mavverick] 21/6/2011 16:39

rents help,... but occupancy is key...
SC have too many homes in the north and too little in the south..and too many in clusters together and competing with each other!!

Need more self payers from everywhere but particularly the South

As the deal becomes clearer SC need to alert Some Councils (council by council)that they need to increase weekly fee rates if they want the homes to remain open

SC need to keep enough of those with a good occupancy...and to have legal agreement to close (hand back) those whose occupancy is circa 85% or less with no sign of short term improvement...these would have been closed many moons ago if the tenancy was different
I still think 400 is too many as there is a sizeable unprofitable tranche that needs severed from SC

[warwick69] 21/6/2011 16:25

Yes LEJ2 thats for sure Defo some manipulation of price if you ask me? Marking price down puts more presure on shareholders and sways advantage towards landlords for sure. Guess there is also some interested short positions that want to see it lower.

[lej2] 21/6/2011 15:33

Some II's must be selling. There are not many PI's with 2 million shares in this company. The share price movement infers that deals are being done between MM's.

[warwick69] 21/6/2011 15:20

LEJ there is no way all he existing II's will sell out to the companies acting for the LL's why should they if they hold fire then they are more likely to get a share of a restructured business with bettger profit prospects beacuase will have better rent agreements.

[lej2] 21/6/2011 15:14

There is nothing odd here. The Landlords are dictating and will keep the homes going in some format, with the business to be owned by the Landlords, split over many companies.

The institutions acting for LL's will be buying cheaply as the other institutions see the writing on the wall and accept offers made for tranches of shares. This will ensure that the eventual shareholders vote will go in the LL's favour as they will control a huge percentage of the shares.

The cost of doung this, even at £10 million, is nothing compared with the minimum £2 billion of freeholds.

All guesswork on my part, but it does make sense of the share price movement.