TIDMCTH
RNS Number : 4674D
CareTech Holdings PLC
27 April 2017
For immediate release 27 April 2017
CareTech Holdings PLC
("CareTech" or "the Group")
Half Year Trading Update
CareTech Holdings PLC (AIM: CTH), a pioneering provider of
specialist social care services in the UK, is pleased to announce
its pre-close trading update ahead of its results for the half year
ended 31 March 2017.
The Board confirms that trading for the half year is in line
with market expectations. This performance has been underpinned by
the strategic initiatives undertaken over recent years which have
delivered a stronger performance compared with the same period last
year on all of the key financial metrics.
CareTech's care pathways continue to be a key foundation to
delivering positive outcomes for our service users. By helping our
service users to live more independently, we are working in
partnership with local authorities by providing them with greater
value for money.
The Group's net capacity at the half year was 2,359 places
(2016: 2,319 places), a net increase of 40 residential and
supported living places. Of this total 13 additional beds were in
reconfigured services; in new services there were 20 new beds in
Adults and 20 new beds in Children's. The new and reconfigured
services have a higher contribution than the beds in
pre-configuration and are part of an ongoing strategy to enhance
margins. There were 13 new beds withdrawn for reconfiguration in
the half year. There was no change of capacity in fostering.
Compared with 30 September 2016, occupancy levels in the mature
estate are unchanged at 93% and the blended occupancy is also
unchanged at approximately 86%.
On 23 March 2017, CareTech announced a placing which raised
approximately GBP39 million (before expenses) for the Company. A
number of organic growth projects and potential bolt-on
acquisitions have been identified and the intention is that the
placing proceeds be deployed within approximately twelve
months.
We continue to make good progress with a number of these
opportunities. We undertake a thorough review process of new
potential targets with a small senior team involved and have a
strong pre- and post-implementation focus. The success of recent
acquisitions and their transition to our core business is the
template for future projects.
On 28 March 2017, 344,305 new ordinary shares were issued as
part of the arrangements for full and final settlement of the
earn-out agreed with the vendors of ROC North West Limited ("ROC"),
acquired by the Company in December 2015. The new Ordinary Shares
were issued at a deemed price of 365 pence per share. The new
shares were listed on AIM on 3 April 2017.
The Group expects to continue to achieve further growth by a
combination of reconfiguring services and extending facilities in
partnership with local authorities and through organic developments
and bolt on acquisitions. These initiatives together underpin
strong underlying future earnings growth.
Care commissioners continue to demand flexible high quality care
solutions and favour operators able to deliver across the care
pathway. Pleasingly, some of the 2016 reconfigured services that
have opened are already experiencing strong levels of demand from
local authorities for referrals, validating our strategy of
reconfiguration focusing upon greater acuity service provision.
Annual fee rate negotiations with local authorities remain at an
early stage and this year are against the backdrop of an increase
in the Living Wage to GBP7.50 per hour from 1 April 2017. The Board
anticipates that a more positive outcome will be achieved than in
recent years and that the Living Wage costs will be covered by fee
increases.
Net debt reduced to GBP123.0m at 31 March 2017 from GBP156.9m at
30 September 2016. The Company raised GBP39m gross from the share
placement and spent money on the expenses of the placement and on
additional capital expenditure. There was investment in new
properties purchased, to open later in the year as residential
services when refurbished, and further investment in IT
systems.
The four banks in the Group's banking syndicate agreed on 28
March 2017 to defer repayment of the loan instalments due on 1
April 2017 and on 1 October 2017 until January 2019. The Company
plans to make these additional funds available of GBP11.55m for the
purchase of more properties and bolt-on acquisitions.
Following the launch of the CareTech Aspire Programme in 2015
our Learning Division continues to ensure that all of CareTech's
care staff receive high quality mandatory and statutory training
whilst also being offered the opportunity to complete a Level 2 or
Level 3 apprenticeship. We have extended this offer to our CareTech
managers who have the opportunity to complete a Level 5 in care
management. Due to its Ofsted "Outstanding" rating Dawn Hodge
Associates is well placed in the Care Sector to start offering
these Apprenticeships to other Care providers.
We are pleased that 178 of our support staff have completed a
level 2/3 apprenticeship and 393 are currently taking the
qualification. A further 58 are benefiting from Level 5, Team
Leader, Business Administration or Customer Services delivered by
the Learning Division.
As an employer, CareTech is a registered apprenticeship training
provider in its own right and the Board is convinced of the
benefits that our apprenticeship programme has had for both our own
staff and for the users of our services. The apprenticeship levy is
an opportunity to continue to deliver excellence in the care sector
and is a tangible example of the Group's commitment to training and
retaining its workforce.The Group is also fully committed to
Disability Confident and is in the process of completing the
employer scheme accreditation.
To facilitate growth the management team has been further
strengthened in the half year and we will continue to bring senior
executives into the business to help build a strong foundation from
which to drive growth and quality. The Adults LD Division is now
managed by two managing directors having been split into two
regions to enable geographic focus, and a new Children's MD has
been appointed. A further appointment will be a Specialist Services
MD to manage Oakleaf and the mental health services to reflect the
broadening of acuity. The Learning Division and compliance teams
are also being strengthened.
CareTech will announce its interim results in June 2017.
Farouq Sheikh, Executive Chairman, commented:
"I am pleased to report another solid performance in the six
months ended 31 March 2017, highlighting the growth trajectory that
our strategy is delivering. We are delighted by the support we
received in the oversubscribed fundraising announced on the 23
March 2017. The additional funds will allow us to accelerate our
growth strategy through organic initiatives and bolt-on
acquisitions.
"We have considerable headroom for further investment with the
share placement monies, money from our loan deferrals and existing
bank facilities, and also from our strong underlying cash flow. We
intend to continue to deliver our exciting growth strategy, both
organically and through bolt-on acquisitions."
For further information, please contact:
CareTech Holdings PLC
Farouq Sheikh, Executive
Chairman
Michael Hill, Group Finance
Director 01707 601800
Buchanan (PR Adviser)
Mark Court
Sophie Cowles
Stephanie Watson 0207 466 5000
Panmure Gordon (Nomad and
Joint Broker)
Freddy Crossley
Peter Steel
Charles Leigh-Pemberton 020 7886 2500
WH Ireland (Joint Broker)
Adrian Hadden
Nick Prowting 020 7220 1666
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
About CareTech
CareTech is a leading provider of specialist social care
services, supporting adults and children with a wide range of
complex needs in more than 260 specialist services around the
UK.
Committed to the highest standards of care and care governance,
CareTech provides its innovative care pathways through five
divisions covering adult learning disabilities, specialist
services, young people residential services, foster care and
learning services.
CareTech, which was founded in 1993, began trading on the AIM
market of the London Stock Exchange in October 2005 under the
ticker symbol CTH. Its freehold portfolio comprises more than 200
properties.
For further information please visit: www.caretech-uk.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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