57OE Endeavour Sch31

 

TIDM57OE 
 
RNS Number : 7497R 
Endeavour SCH PLC 
31 August 2010 
 
                                ENDEAVOUR SCH PLC 
 
                            INTERIM MANAGEMENT REPORT 
                    FOR THE 6 MONTH PERIOD ENDED 30 JUNE 2010 
 
 Principal Activity 
 
The Company's principal activity continues to be that of a Private Finance 
Initiative Concessionaire for the South Tees Acute Hospitals Single Site 
Project, under the terms of a Concession Agreement dated 16 August 1999 between 
the Company and South Tees Acute Hospitals National Health Service Trust ('the 
Trust'). The Company's Concession Agreement requires it to finance, design, 
develop and construct and then maintain and part operate the enlarged hospital 
following completion of new facilities and certain other work. The concession is 
intended to continue for a period of 30 years after hospital completion which 
occurred on 16 July 2003, and the project is now in its operational phase. 
 
Principal risks and uncertainties for the remainder of the financial year 
 
Hospital Availability Payments received by the Company 
Investment in the Project is funded primarily by Index Linked Secured Guaranteed 
Bonds ('the Bonds') and subordinated unsecured loan stock. During the 
operational phase the principal source of funds available to the Company to meet 
its liabilities under the Bonds are Availability Payments received from the 
Trust under the Concession Agreement. Failure to achieve the forecast levels of 
availability would result in lower than forecast revenues and this may adversely 
affect the company's ability to make payments to Bondholders. There have been no 
deductions for unavailability in the periods covered in these Condensed 
Unaudited Interim Financial Statements. 
 
Major Maintenance 
The Company is obliged under the Concession Agreement to undertake major 
maintenance and plant/equipment replacement so that it continues to satisfy the 
standards required. There are a number of factors which could lead to higher 
than projected costs, such as shorter than anticipated life spans or increased 
inflation on specific items of plant and equipment or worse than expected 
condition of the residual estate. This risk has been mitigated through 
contractual arrangements with the subcontractor undertaking this work, as 25% of 
the risk of asset failure is shared with the subcontractor. 
 
Service Performance 
The Hotel and Maintenance Services are monitored against agreed objective 
measures. Ultimately, poor performance may result in the Trust having the right 
to terminate the Concession Agreement. There have been no deductions for poor 
performance in the periods covered in these Condensed Unaudited Interim 
Financial Statements. 
 
Trust Status and Performance 
Failure by the Trust to perform its obligations may affect the Company's ability 
to meet its liabilities to Bondholders. However the Trust's obligations under 
the Concession Agreement are underwritten by the Secretary of State for Health. 
 
Financial Instruments Risk 
The Company does not undertake financial instrument transactions which are 
speculative or unrelated to the Company's trading activities. The Company's 
funding has been arranged using the principles of project finance with the terms 
of the financial instruments, and the resulting profile of the debt service 
costs, tailored to match the expected revenues arising from the Concession 
Agreement. Board approval is required for the use of any new financial 
instrument, and the Company's ability to do so is restricted by covenants in its 
existing funding agreements. Other disclosures in respect of financial 
instruments are given in notes 9, 10, 11, 12, 13 and 15 to the Condensed 
Unaudited Interim Financial Statements. 
 
 
 
 
                                ENDEAVOUR SCH PLC 
 
                            INTERIM MANAGEMENT REPORT 
              FOR THE 6 MONTH PERIOD ENDED 30 JUNE 2010 (continued) 
 
Operational and financial review 
 
In the opinion of the Directors, the project has achieved a satisfactory 
performance in the period under review. 
Income for the six month period ended 30 June 2010 of GBP19.74 million (six 
month period ended 30 June 2009: GBP18.12 million) and operating profit for the 
same period of GBP7.84 million (2009: GBP7.99 million) is in line with 
expectations. Profit before tax for the six month period ended 30 June 2010 is 
GBP2.37 million (six month period ended 30 June 2009: GBP5.16 million) and is in 
line with expectations. The Directors declared and paid a GBP2.8 million 
dividend in the six month period ended 30 June 2010 (2009: GBP3.56 million). 
 
The level of operating profits before financing costs are broadly similar for 
both 6 month periods under review. The financing costs were lower in the six 
month period to 30 June 2009 as the Retail Price Index in January and July 2009 
deflated from the July 2008 level. As the indexation on the Bonds is calculated 
with reference to the RPI in January and July each year, this caused a lower 
than usual quantum of indexation on the Bonds in the six month period ended 30 
June 2009 and hence a lower financing charge in this period. 
 
There have been no significant events that have occurred during the first six 
months of the financial year that have had a material impact on the Condensed 
Unaudited Interim Financial Statements. 
 
 
 
On behalf of the Board of Directors 
 
 ...................................... 
R Roberts - 31 August 2010 
 
Company Secretary 
 
 
                                ENDEAVOUR SCH PLC 
 RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE INTERIM MANAGEMENT 
                                     REPORT 
 
We confirm that to the best of our knowledge: 
 
Ø The Condensed Unaudited Interim Financial Statements included in this Interim 
Financial Report have been prepared in accordance with UK Generally Accepted 
Accounting Practice and give a true and fair view of the assets, liabilities, 
financial position and profit of the Company. 
 
Ø Appropriate disclosure under DTR 4.2.7R of the Disclosure and Transparency 
Rules has been made in the Interim Management Report as to any significant 
events that have occurred during the first six months of the financial year that 
have had a material impact on the Condensed Unaudited Interim Financial 
Statements. 
 
Ø Appropriate disclosure under DTR 4.2.7R of the Disclosure and Transparency 
Rules has been made in the Interim Management Report as to a description of the 
principal risks and uncertainties for the remaining six months of the financial 
year. 
 
 
On behalf of the Board of Directors 
 ...................................... 
R Roberts - 31 August 2010 
 
Company Secretary 
 
The Directors are responsible for preparing the Interim Management Report and 
the Condensed Unaudited Interim Financial Statements in accordance with the 
applicable Disclosure and Transparency Rules of the United Kingdom Financial 
Services Authority in relation to an Issuer of Debt Securities which are listed 
on the London Stock Exchange. 
 
The annual financial statements of the Company are prepared in accordance with 
UK Generally Accepted Accounting Practice (UK GAAP). The financial information 
contained in the Condensed Unaudited Interim Financial Statements is pro-forma 
and does not constitute full statutory accounts within the meaning of section 
435 of the Companies Act 2006. The information has been extracted from the 
records of the Company for the six month periods ended 30 June 2010 and 30 June 
2009 and for the year ended 31 December 2009. The information has been prepared 
using the accounting policies and basis of preparation set out in Note 1 to the 
Annual Report and Accounts 2009. 
 
Cautionary statement regarding forward-looking statements 
The Interim Management Report and Condensed Unaudited Interim Financial 
Statements (together the " Interim Report") may contain certain projections and 
other forward-looking statements with respect to the financial condition, 
results of operations and the business of Endeavour SCH PLC. These statements 
are based on current expectations and involve risk and uncertainty because they 
relate to events and depend upon circumstances that may occur in the future. 
There are a number of factors which could cause actual results or developments 
to differ materially from those expressed or implied by these forward-looking 
statements. Although Endeavour SCH PLC currently believes that the assumptions 
underlying these forward-looking statements are reasonable, any of the 
assumptions could prove inaccurate or incorrect and therefore there can be no 
assurance that any results contemplated in the forward-looking statements will 
actually be achieved. Nothing contained in this Interim Report should be 
construed as a profit forecast or profit estimate. Investors or other recipients 
are cautioned not to place undue reliance on any forward-looking statements 
contained herein. Endeavour SCH PLC undertakes no obligation to update or revise 
(publicly or otherwise) any forward-looking statement, whether as a result of 
new information, future events or other circumstances. This Interim Report does 
not constitute an invitation or inducement to any person to subscribe for, or 
otherwise acquire, securities issued by Endeavour SCH PLC. 
 
 
Click on, or paste the following link into your web browser, to view the 
associated PDF document. 
 
 http://www.rns-pdf.londonstockexchange.com/rns/7497R_1-2010-8-27.pdf 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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