AGM Statement

Company news

Feb 07, 2007

Care UK's success in growing the business, both with important new contract awards as well as organic growth, continues to place it at the forefront of developments in the health and social care sectors.

In Residential Care Services we have been awarded two further preferred bidder appointments. The London Borough of Kensington and Chelsea has appointed us preferred bidder for a 21-year contract to manage a new home currently being constructed; 30 of the 60 beds are to be contracted and services are planned to commence in early summer 2007. Slough Borough Council has appointed us preferred bidder for a 15-year contract for a new 120-bed home, which will be constructed by Care UK; 90 of the beds are to be contracted and services are expected to commence in 2009.

In Community Care Services the annual rate of growth in Homecare continues to exceed 25%, through a combination of organic and acquisitive growth, although this rate of growth will become more challenging as the year progresses due to the high level of growth experienced in the second half of 2006. We have recently completed the acquisition of Access Homecare, a Manchester based provider of homecare and learning disabilities services for total consideration of £3m. Access provides around 8,000 hours of care each week with a high proportion contracted by Local Authorities in North West England.

In Specialist Care Services we have recently appointed a new divisional Managing Director and will provide further details in due course when he takes up this role. We are continuing to integrate the acquisitions made late in the previous financial year as well as implement recently won contracts and we expect to see an improved performance in this division during the year despite the evident funding pressures on Local Authorities in relation to the commissioning of more intensive placements.

Within Clinical Care Services, we have previously announced two important and substantial contract awards. Care UK was appointed preferred bidder for an innovative clinical assessment and treatment contract in Manchester and Partnership Health Group ("PHG"), our specialist hospital management joint venture company, was appointed preferred bidder to provide services at two hospitals in Hampshire, the first time an independent sector company is to manage an NHS hospital in its entirety. Good progress is being made on both projects.

In addition, Care UK has been appointed preferred bidder for a contract to provide primary care services at HM Prisons Preston, Garth and Wymott in Lancashire, a further step toward establishing a significant primary care business.

The implementation phase of PHG's two new Independent Sector Treatment Centres at Maidstone, which opened in November 2006, and in North East London, which started treating patients in early January 2007, is progressing as planned. We are also making good progress towards reaching financial close on the North-East regional diagnostics contract where services are due to commence in summer 2007.

We continue to invest in our management team to manage this accelerated rate of growth. The planned implementation timescales of the current projects will enable this additional investment to be funded within expectations for the current financial year.

Board change
As previously announced, Lesley James is retiring today as a non-executive director of Care UK. Lesley has served Care UK extremely well for over six years and I would like to thank her for her extensive contribution.

Prospects
Momentum across the four Care UK divisions continues to be positive. The annualised value of the current preferred bidder awards, projects in construction, and recent acquisitions represents substantial growth for the Group. Beyond this, we remain confident of further opportunities for growth in our social care focussed services and we are fundamentally of the view that the role of the independent sector in providing clinical services to NHS patients is only just beginning.