TRADING UPDATESince the Board last updated shareholders on current trading at the time of the Company's Annual General Meeting on 14 January, it has become clear that the trading performance of the Nursery Division has deteriorated. At that time we noted that nursery occupancy was tracking previous year's levels, but was below our budgets.However, there has been a subsequent, sudden and marked decline in occupancy levels. Whilst previously planned new sales and marketing strategies, introduced in February, have already begun to show positive results, the improvement in occupancy rates has to some extent been delivered by targeted reductions in fee rates. In addition we have had to defer planned fee rate rises in order to avoid jeopardising existing occupancy levels. The combination of low occupancy levels, underperformance in average fee rates and the high fixed cost base of a nursery business will result in a material reduction in the Division's contribution to Group profits for the current financial year, by comparison with previous internal forecasts. Our own experience reflects a wider market trend across the sector, with increasing availability of places exceeding the rate of increase in demand. Occupancy trends within the Division are quite divergent. The core of the original Leapfrog estate is performing well, given the difficult market environment, with occupancy rates stable year-on-year. We did however underestimate the seriousness of the problems within the former Jigsaw estate, where occupancy rates have continued to decline from the already depressed levels that we inherited. Insofar as the other businesses are concerned, the International Schools Division is performing strongly and is ahead of plan. The Outsourcing Division continues to trade in line with expectations. However, as a result of the underperformance within the Nursery Division, it is now clear that profits for the current financial year will be significantly lower than market expectations. However, we still expect earnings per share to be similar to or better than last year. The Group is in discussions with its principal lender regarding any possible implications arising from this trading statement in relation to its banking arrangements. The principal lender has been supportive and on this basis the Directors are confident that they will be able to resolve any banking issues that might arise. The current performance of the Nursery Division is disappointing. However, the Board believes that the new sales and marketing strategies will return the Nursery Division to previously anticipated levels of profitability, and are already having a positive impact. For further information, please contact: Andrew Fitzmaurice, Chief Executive Officer Lorene Simpson, Finance Director NORD ANGLIA EDUCATION PLC: 0161 491 4191 Lisa Baderoon/Rebecca Skye Dietrich This e-mail address is being protected from spambots. You need JavaScript enabled to view it / This e-mail address is being protected from spambots. You need JavaScript enabled to view it Buchanan Communications 0207 466 5000 " |
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