-3x Short China Regulatory News (SCHE)

Wednesday 8 June 2011

Southern Cross Healthcare Group PLC

('Southern Cross', 'the Company' or 'the Group')

Company Announces Next Stage of its New Horizons Programmme

Southern Cross, the UK's largest care home operator, has today announced plans to address levels of staff effectiveness across its homes, proposing a reduction of up to 3,000 jobs. These plans have been developed, consequent on the Company's staff effectiveness study which was announced earlier this year. The proposed reduction in staff numbers forms part of the ongoing New Horizons programme of change, instigated by the Company's senior management team 18 months ago to improve operational effectiveness.

The New Horizons programme has systematically addressed all aspects of the Group's operations including quality of care, staff development, self funder sales, costs and IT enablement. Resident care, in particular, has continued to improve and clinical governance has been strengthened. Annualised turnover of staff has reduced from 33% (in late 2009) to 21.5%.

A process of consultation has now begun on the potential implementation of a standard contract of employment for new and existing staff, the introduction of new roles in care, ancillary support and maintenance supervision; and the proposed reductions in staff numbers. The Company is committed to working with the GMB and other staff representatives during a period of consultation about improvements in staff effectiveness, investment behind staff training and the minimisation of redundancies.

Southern Cross currently employs 44,000 people in its homes. Home Managers, Deputy Managers and Relief Managers, Activity Coordinators and Administrators will not be directly affected by the proposed reduction in jobs and the process is expected to be complete by October. All affected employees will be offered guidance and support. The process of consultation and the proposed reduction in staff numbers will not jeopardise the continuity or quality of care provided to the Company's 31,000 Residents.

Jamie Buchan, Chief Executive of Southern Cross, said:

"Southern Cross has a strong set of values and a clear vision to serve the care-related needs of elderly people in our society. In today's announcement we are engaging with colleagues to put in place the best possible staffing model for our future needs, and one which fully embraces the best practice available to us.

"In developing this model during a very challenging time for both our company and the industry we are determined that the process we undertake should be exemplary in terms of staff communication."

Christopher Fisher, Chairman of Southern Cross, commented:

"Notwithstanding the current financial pressures, Southern Cross is in the process of transforming the quality of its business. The benefits of the New Horizons programme are becoming apparent but their full effects are still to work through. There is a real momentum behind the ambition of our management team and there is too much of value within our business for it to be lightly discarded."

"Decisions on our future must be governed by a paramount concern for the welfare of our residents. We believe that for a critical mass of our landlords, supporting a restructured Southern Cross remains the most attractive option open to them, as we intend to demonstrate."

ENDS

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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 Group'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 Group'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 Group provides care services for most of the local authorities in the UK which, together with the NHS, represent circa 78% of the Group's revenues. Its care home portfolio is largely purpose-built with a high percentage of single occupancy rooms and rooms with ensuite bathrooms.

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