NSR Nestor Health.

 

TIDMNSR 
 
RNS Number : 2111W 
Nestor Healthcare Group PLC 
16 November 2010 
 

                                                                16 November 2010 
 
                          Nestor Healthcare Group plc 
 
                          Interim Management Statement 
 
Nestor Healthcare Group plc (the "Group") announces its Interim Management 
Statement covering the period from our half-year end 30th June 2010 to date. 
 
Financial performance 
 
Group results in the period since the release of our Interim results have 
continued to slightly exceed the directors' expectations. 
 
Social Care hours have continued to steadily increase despite the evident 
pressures on Local Authority budgets. Our businesses continue to work closely 
with their customers to provide cost effective solutions to the ever-increasing 
demand for care at home. Whilst pricing has been constrained, our focus on 
quality and tight control over costs, together with the benefit of additional 
volume, has enabled our excellent operating profit margins to be maintained. 
 
As previously announced the Group intends to augment its Social Care business 
through a programme of acquisitions, the first one of which has now been 
completed and terms have been agreed on a further two, which will likely 
complete by the year-end. The acquisition cost of all three is expected to be 
GBP8.5m to be funded from the Group's existing debt facilities.  These 
businesses complement Social Care's current domiciliary care branch network and 
all three of them have high quality ratings and excellent relationships with 
their respective Local Authorities. 
 
In Primary Care the planned changes in the commissioning process, to take place 
by March 2013, have not affected the current level of tender activity, with a 
number of opportunities being pursued by the business in out-of-hours provision 
and prison healthcare services. Our six Equitable Access health centres continue 
to be very popular with patients. In two cases the large numbers of walk-in 
attendances is causing budgetary difficulties for the PCTs, which may lead to an 
alternative pricing mechanism more appropriate to the level of activity, or a 
restructuring of the service. 
 
The first of our six practices under the Dental Access Programme opened in July 
and is performing well and a second has recently commenced. The remaining four 
locations are scheduled to open by the end of February 2011. 
 
The Comprehensive Spending Review (CSR) 
 
The content of the recent CSR was, on balance, positive for Nestor, not just 
with regard to the additional GBP2bn of funding by 2014/15 to support the 
delivery of social care, but also the messages regarding the government's 
"direction of travel" which are highly complementary to our strategy. This 
additional funding to provide a better quality and more efficient service across 
the health and social care system is designed to prevent the need for greater 
expenditure in acute healthcare, either by avoiding unnecessary hospital 
admissions or enabling earlier discharge. 
 
Throughout this year our Social Care and Primary Care management teams have been 
working together on initiatives specifically to address the current and future 
combined funding pressures across health and social care. Our combined 
businesses can offer more cost effective solutions to hospital and residential 
care through the provision of healthcare and domestic support to clients to 
avoid hospital admission, or be discharged earlier to return home. Discussions 
with Local Authorities and NHS customers have generated significant interest and 
a number of pilot projects are expected to follow. Our Social Care business has 
already commenced a re-ablement project in partnership with a Local Authority to 
provide service users, including those recently discharged from hospital, with 
support at home to equip them to live as independently as possible, thereby 
reducing their long term care needs. 
 
Financial position 
 
Net borrowings as at 12th November 2010 were GBP13.3m, which compares to the 
last published figure of GBP11.9m as at 30 June 2010. In the period under review 
the Group has made planned deficit reduction payments of GBP1.1m into our 
existing defined benefit pension schemes, paid the interim dividend of 1.25p per 
share, which amounted to GBP1.4m, and paid GBP0.6m in respect of the liability 
under the two interest rate derivative contracts. The cost of the acquisition 
completed in recent days was GBP0.8m. 
 
Vacant property provision 
 
It is likely that in the full year results for 2010, an increase of 
approximately GBP0.5m will be required to the vacant property provision, which 
at 30th June 2010 stood at GBP3.2m. The increase relates to two properties, 
which are about to become vacant. The first results from the exercise of a break 
clause by a longstanding tenant and the second follows the loss of the 
out-of-hours contract referred to in our Interim results statement. 
 
Approach from Acromas Holdings Limited 
 
On 11 August 2010, the Board confirmed it had received an unsolicited approach 
regarding a possible offer for the Group from Acromas Holdings Limited at 90 
pence per share. This offer was rejected, as in the opinion of the directors it 
materially undervalued the Group. The Board announced on 7 October that Acromas 
had revised their offer to 100p per share, which the directors continued to 
believe undervalued the Group but that a meeting between the parties would be 
arranged. The meeting has taken place and discussions with Acromas are 
continuing. A further announcement will be made when appropriate. 
 
 
Contact details 
 
John Rennocks, Chairman 
John Ivers, Chief Executive 
 
Martyn Ellis, Finance Director 
 
Nestor Healthcare Group plc 
Tel: 01707 255632 
 
Toby Mountford 
Citigate Dewe Rogerson 
Tel: 0207 638 9571 
       07710 356611 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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