TIDMCTH
RNS Number : 2353W
CareTech Holdings PLC
22 April 2021
22 April 2021
CareTech Holdings PLC
("CareTech" or "the Group")
Trading Update
CareTech Holdings PLC (AIM: CTH), a pioneering provider of
specialist social care and education services to adults and
children in the UK , today announces a pre-close trading update for
the half-year ended 31 March 2021. The Group will report its
unaudited half-year results on Thursday 17 June 2021.
Highlights
-- Group performance for H1 in-line with market expectations
-- Continued resilience against impact of COVID-19 pandemic
-- Net debt reduced to GBP263.1m (GBP268.9m at 30 September 2020) and leverage reduced to below medium term target
of 3.0x EBITDA
-- La unch of the 100 Voices initiative to enable Smartbox technology to reach adults and children in CareTech
services
-- Portfolio of highly specialised facilities for the treatment and care of adults with complex l earning d
isabilities, a utism and mental health diagnoses, comprising 142 beds, successfully transferred from the
Huntercombe Group
-- 13 new Children's Services developments opened with an active pipeline for H2 2021
-- Final dividend of 8.75p per share reconfirmed and to be paid to shareholders on 5 May 2021
Farouq Sheikh, Executive Chairman of CareTech, commented:
"I am delighted with the performance of the Group over the first
half of the financial year. Operationally the business continues to
demonstrate considerable resilience in this challenging environment
and I am pleased to report that our trading performance for the
period is in-line with market expectations with stronger
performance for the Group when compared with the same period last
year.
"I am excited we have launched our innovative 100 Voices
programme, which allows Smartbox technology to reach adults and
children within the Group. Not only has this allowed contact with
loved ones during the pandemic but reaffirmed our belief that
digital adoption can be central to allowing individuals with
complex needs to live more independently.
"During the first half, we have completed a number of
development opportunities within our portfolio and continue to see
a strong pipeline for the remainder of the year across the Group.
We have successfully transitioned seven higher acuity adults
specialist services from the Huntercombe Group and have already
taken steps to improve performance.
"I remain sincerely appreciative to our staff during this
period. Their efforts, determination and support for others has
continued to be truly extraordinary."
Trading and operational performance
The overall performance of the Group was in line with market
expectations, with stronger revenues and increased EBITDA for the
Group when compared to the same period last year.
All of the Group's operations have remained open during the
first half of the year with a focus on obtaining COVID-19
vaccinations for staff and service users. A taskforce has been set
up to support and co-ordinate CareTech's group-wide vaccination
programme. As at 31 March 2021, over 6,500 staff members and 1,800
service users had received the first dose of the vaccination.
Following the acquisition of a majority holding in Smartbox in
October 2020 and the Group's ambitions to build out its digital
healthcare capabilities, CareTech will be including a new Digital
Technology segment in the divisional reporting within the interim
results. Smartbox has successfully transitioned into the CareTech
Group, with the launch of a new 100 Voices initiative to ensure
that Smartbox technology reaches adults and children in CareTech
care homes, specialist schools and complex needs services. The
initiative will provide individuals with a voice and in turn allow
them to live a more independent life.
As at 31 March 2021, unaudited net debt was GBP263.1m compared
with GBP268.9m at 30 September 2020 with net debt/unaudited
adjusted EBITDA falling to 2.8x. Strong operating cash flow has
been deployed to open 13 new developments, to acquire and integrate
Smartbox and transition adult specialist service sites transferred
from the Huntercombe Group in November 2020. The Group's capital
allocation policy remains to deploy free cash flow to organically
invest in the business, add developments to the portfolio, assess
bolt-on acquisition opportunities and continue a progressive
dividend policy.
The National Living Wage increased from 1 April 2021 to GBP8.91.
From 1 June 2021, the Group is increasing the minimum national
hourly rate to GBP9.00 to recognise CareTech's front line staff who
have been key to supporting service users during the pandemic. The
Group expects fee increases to cover the majority of additional
operational costs including increases to front line staff pay.
CareTech noted the Supreme Court's judgement regarding sleep-ins
and the Group's significant provision of c.GBP12m will be released
and reflected in the H1 results.
Capacity and occupancy
The Group's net capacity as at 31 March 2021 was 5,135 places
(September 2020: 4,984 places). Adult's Services increased to 2,140
(September 2020: 1,997), the increase mainly attributable to the
addition of 142 beds from seven services that were previously
operated by The Huntercombe Group, offering highly specialised
facilities for the treatment of complex learning disabilities,
autism and mental health. Children's Services increased to 1,981
(September 2020: 1,959) with the addition of 13 new developments
opening in the period offset by four closures. Fostering decreased
to 1,014 (September 2020: 1,028) largely due to blocked beds as a
result of COVID-19 restrictions.
At 31 March 2021, occupancy levels in the mature estate remained
at 83% (September 2020: 83%) with blended occupancy increasing to
81% (September 2020: 80%).
CQC quality ratings and staff retention
Throughout the COVID-19 pandemic, both CQC and OFSTED have
suspended all routine inspections. CQC have undertaken a limited
number of rated inspections during the period and overall the Group
has been found to have continued to deliver high quality care in
extremely challenging circumstances. The Group has also performed
well in the CQC infection control inspection programme with a high
number of our services achieving 'assured' from the regulator.
Across the Group, CQC quality ratings at 31 March 2021 remained
ahead of sector comparators at 88% Good or Outstanding (September
2020: 91%), the change being attributable to a limited number of
services moving from Good to Requires Improvement. These sites have
a comprehensive improvement plan in place and the Group is
confident these will be upgraded as the regulator returns to a more
usual and regular pattern of inspections. OFSTED ratings have
remained at the high levels of 82% Good or Outstanding across the
Group.
Staff retention increased to 76% compared to 75% in the previous
period. Throughout the pandemic we have partnered with many
displaced sectors such as retail, corporate hospitality and
leisure, which has allowed the Group to offer opportunities to both
experienced candidates as well as those looking for their first
role in social care. Successful applicants are supported through
our comprehensive induction programme, which historically has
resulted in good rates of long-term retention compared to the
sector as a whole.
Group Dividend
The Group reconfirms its final dividend of 8.75p per Ordinary
Share which was approved by Shareholders at the Group's AGM on 9
March 2021 and will be paid on 5 May 2021 to shareholders who were
on the share register at the close of business on 4 March 2021.
For further information, please contact:
CareTech Holdings PLC 01707 601800
Farouq Sheikh, Executive Chairman
Christopher Dickinson, Group Finance Director
Consilium Strategic Communications 020 3709 5700
Mary-Jane Elliott
Chris Welsh
Angela Gray
Panmure Gordon (Nomad and Joint Broker) 020 7886 2500
Emma Earl
Freddy Crossley
Charles Leigh-Pemberton
Numis (Joint Broker) 020 7260 1000
Jonathan Wilcox
James Black
Duncan Monteith
About CareTech
CareTech Holdings PLC is a leading provider of specialist social
care services supporting around 5,000 adults and children with a
wide range of complex needs in more than 550 day services the UK
employing more than 10,500 staff; and an emerging presence in
international markets.
Committed to the highest standards of care and care governance,
CareTech's innovative Care Pathway covers Foster care, Children's
Services, Adults Services and Technology Solutions.
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.
For further information please visit: www.caretech-uk.com
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END
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