Financial Express (Holdings) Limited (“we”, “our”, “us” and derivatives) are committed to protecting and respecting your privacy. This Privacy Policy, together with our Terms of Use, sets out the basis on which any personal data that we collect from you, or that you provide to us, will be processed by us relating to your use of any of the below websites (“sites”).

  • FEAnalytics.com
  • FEInvest.net
  • FETransmission.com
  • Investegate.co.uk
  • Trustnet.hk
  • Trustnetoffshore.com
  • Trustnetmiddleeast.com

For the purposes of the Data Protection Act 1998, the data controller is Trustnet Limited of 2nd Floor, Golden House, 30 Great Pulteney Street, London, W1F 9NN. Our nominated representative for the purpose of this Act is Kirsty Witter.

WHAT INFORMATION DO WE COLLECT ABOUT YOU?

We collect information about you when you register with us or use any of our websites / services. Part of the registration process may include entering personal details & details of your investments.

We may collect information about your computer, including where available your operating system, browser version, domain name and IP address and details of the website that you came from, in order to improve this site.

You confirm that all information you supply is accurate.

COOKIES

In order to provide personalised services to and analyse site traffic, we may use a cookie file which is stored on your browser or the hard drive of your computer. Some of the cookies we use are essential for the sites to operate and may be used to deliver you different content, depending on the type of investor you are.

You can block cookies by activating the setting on your browser which allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or part of our sites. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies as soon as you visit our sites.

HOW WE USE INFORMATION

We store and use information you provide as follows:

  • to present content effectively;
  • to provide you with information, products or services that you request from us or which may interest you, tailored to your specific interests, where you have consented to be contacted for such purposes;
  • to carry out our obligations arising from any contracts between you and us;
  • to enable you to participate in interactive features of our service, when you choose to do so;
  • to notify you about changes to our service;
  • to improve our content by tracking group information that describes the habits, usage, patterns and demographics of our customers.

We may also send you emails to provide information and keep you up to date with developments on our sites. It is our policy to have instructions on how to unsubscribe so that you will not receive any future e-mails. You can change your e-mail address at any time.

In order to provide support on the usage of our tools, our support team need access to all information provided in relation to the tool.

We will not disclose your name, email address or postal address or any data that could identify you to any third party without first receiving your permission.

However, you agree that we may disclose to any regulatory authority to which we are subject and to any investment exchange on which we may deal or to its related clearing house (or to investigators, inspectors or agents appointed by them), or to any person empowered to require such information by or under any legal enactment, any information they may request or require relating to you, or if relevant, any of your clients.

You agree that we may pass on information obtained under Money Laundering legislation as we consider necessary to comply with reporting requirements under such legislation.

ACCESS TO YOUR INFORMATION AND CORRECTION

We want to ensure that the personal information we hold about you is accurate and up to date. You may ask us to correct or remove information that is inaccurate.

You have the right under data protection legislation to access information held about you. If you wish to receive a copy of any personal information we hold, please write to us at 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Any access request may be subject to a fee of £10 to meet our costs in providing you with details of the information we hold about you.

WHERE WE STORE YOUR PERSONAL DATA

The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may be processed by staff operating outside the EEA who work for us or for one of our suppliers. Such staff may be engaged in, amongst other things, the provision of support services. By submitting your personal data, you agree to this transfer, storing and processing. We will take all steps reasonably necessary, including the use of encryption, to ensure that your data is treated securely and in accordance with this privacy policy.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our sites; any transmission is at your own risk. You will not hold us responsible for any breach of security unless we have been negligent or in wilful default.

CHANGES TO OUR PRIVACY POLICY

Any changes we make to our privacy policy in the future will be posted on this page and, where appropriate, notified to you by e-mail.

OTHER WEBSITES

Our sites contain links to other websites. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

CONTACT

If you want more information or have any questions or comments relating to our privacy policy please email [email protected] in the first instance.

 Information  X 
Enter a valid email address

CareTech Holdings (CTH)

  Print      Mail a friend

Thursday 07 December, 2017

CareTech Holdings

Preliminary Results

RNS Number : 6346Y
CareTech Holdings PLC
07 December 2017
 

 

For immediate release

7 December 2017

 

CareTech Holdings PLC

("CareTech" or "the Group")

Preliminary Results for the year ended 30 September 2017

CareTech Holdings PLC (AIM: CTH), a pioneering provider of specialist social care services in the UK, is pleased to announce its unaudited preliminary results for the year ended 30 September 2017.

Highlights       

 

·   

Revenue increased by 11.4% to £166.0m (2016: £149.0m)

 

·   

Underlying EBITDA(i) increased by 7.5% to £39.9m (2016: £37.1m)

 

·   

Underlying profit before tax(ii) increased by 12.6% to £29.4m (2016: £26.1m)

 

·   

Underlying basic EPS remained at 38.03p per share(ii) (2016: 38.03p) following the share placement.

·   

Cash inflows from operating activities before non-underlying items of £32.7m (2016: £34.2m) with net debt (iii) of £147.1m (2016: £156.4m)

 

·   

Overall capacity increased by 215 places(v) to 2,534 (2016: 2,319)

 

·   

Property portfolio valued at £329m

 

·   

Established the CareTech Charitable Foundation

 

Statutory Financial Highlights

 

 

 

·   

Share Placement raised £37.4m for acquisitions

 

 

·   

Acquisition of Selborne Care completed in the year

 

 

·   

EBITDA(iv) decreased by 13.8% to £35.6m (2016: £41.3m)

 


·   

Net Assets increased by 34.6% to £204.2m (2016: £151.7m)

 


·   

Operating profit decreased by 25.6% to £22.7m (2016: £30.5m)

 


(i)            Underlying EBITDA is operating profit stated before depreciation, share-based payments charge and non-underlying items

(ii)           Underlying profit before tax and underlying diluted earnings per share are stated before non-underlying items

(iii)          Net Debt as defined by the Group's Banking facilities and comprises cash and cash equivalents net of all Loans and Borrowings due to the Group's Bankers

(iv)           EBITDA is operating profit stated before depreciation, share-based payments charge and amortisation of intangible assets

(v)            Overall capacity has increased by 215 reflecting the net increase of 161 beds in reconfigured services and new services, 87 beds from Acquisition of Selborne Care, less 36 beds withdrawn for reconfiguration and 3 places in small supported living packages



Commenting on the results, Farouq Sheikh, Executive Chairman, said:

"This has been another exceptionally busy year with one of the highlights being a very over-subscribed share placement which raised £37.4m for acquisitions.

 

"We utilised some of these funds to acquire Selborne Care in June 2017 whilst we have also accelerated our organic initiatives including property purchases and reconfigurations.  One of the properties is Beacon Reach which is a substantial Education and Residential facility for ROC NW who recently won the Laing and Buisson Award in Social Care for Children's Services. Post year-end, for all staff we have launched a second employee Sharesave Scheme.  We enter the current financial year with strong underlying cash flow, solid organic growth and a sizeable pipeline of opportunities, which together give us confidence in continue to deliver our exciting growth strategy.

 

"CareTech joined AIM in 2005 and we are therefore celebrating our 12th year in the public markets.  During this time, the business has transformed from being very focused on supporting adults with a learning disability through residential and day care settings to one where today we also cater for young people and children with complex needs across a range of settings, be it residential, supported living or community support.  We focus on the most complex and vulnerable young people and the market for this client group stands at over £10bn. There is currently an undersupply of specialist beds in this niche area and the market is growing by almost 3% per annum.

 

"On joining AIM, the Group had a capacity of 435 places, an underlying EBITDA of £2.4m with an underlying diluted EPS of 4.1p. Today our capacity has increased almost six fold to 2,534, our underlying EBITDA has grown significantly to £39.9m today whilst underlying diluted EPS has risen to 38.02p pence per share. Underlying EBITDA and diluted EPS have grown by an impressive compound annual growth rate of 26% and 20% respectively since IPO.

 

"With the money raised from shareholders, solid free cash flow generated from the business plus access to bank funding, we have major investment plans for 2018 and beyond with key new organic developments and bolt-on acquisitions. Importantly, we have also, and continue to, further strengthen our management team, offering a forceful blend of experience, commercial wisdom and dedication to care.  I have no doubt that the next few years will see continuing growth and care excellence which will help deliver our target of double digit growth in underlying EPS."

 

 

For further information, please contact:

 

CareTech Holdings PLC

01707 601 800

Farouq Sheikh, Executive Chairman


Michael Hill, Group Finance Director




Buchanan

0207 466 5000

Mark Court


Sophie Wills


Stephanie Watson




Panmure Gordon (NOMAD and Joint Broker)

020 7886 2500

Freddy Crossley

Peter Steel


Charles Leigh-Pemberton




WH Ireland (Joint Broker)

020 7220 1666

Adrian Hadden


Jessica Cave

Alex Bond


 

 

"This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014."

 

 

 

 

About CareTech

 

CareTech Holdings plc 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 which come under the two outcome-based sectors of Adult Services and Young People 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 property portfolio comprises more than 200 properties.

 

For further information, please visit: www.caretech-uk.com



Chairman's Statement

A successful 2017 creating a platform for further expansion

 

I am pleased to present our results for the year ended 30 September 2017. This has been another successful and exceptionally busy year, with the key highlights being:

 

·      Share placement raised £37.4m for acquisitions (net of expenses)

·      Accelerated organic initiatives including property purchases and reconfigurations

·      Completion of the acquisition of Selborne Care during the year which added to our geographic and Adults Service offering

·      Further strengthening of our management team and investment in IT systems

·      Benefit from the improved terms of the banking facilities

·      Established the CareTech Charitable Foundation and its registration with the Charity Commission

It is really pleasing to note that we have continued to maintain our position as a leading care provider with our improved quality ratings across the Group. Moreover, we have extended our care pathways through successful outcomes for the people we support.  As a result, we have improved our capacity during the year which has led to an increase in key financial KPIs and our underlying EBITDA.

 

Set out below is a summary of our financial results where:

 

·      Revenue has increased by 11.4% to £166.0m

·      Underlying EBITDA has increased by 7.5% to £39.9m

·      Underlying PBT has increased by 12.6% to £29.4m

·      Underlying basic EPS remained at 38.03p

·      Net Assets increased by 34.6% to £204.2m (2016: £151.7m)

·      Cash inflows from operating activities reduced by 4.4% to £32.7m

·      Full year dividend increased by 7.0% to 9.90p

All of the above mentioned initiatives demonstrate a solid performance on delivery of both the key financial and non-financial metrics and put the Group in a strong position to target further underlying EPS growth going forward.

 

The Group has stood out from its peers as a company that can successfully combine quality, integrity and sound financial acumen and has consistently achieved good care quality ratings.  Our credibility as the provider of choice has never been stronger and we continue our successful growth strategy with a confident outlook.

 

On 23 March 2017 the Company announced an oversubscribed placing which raised £37.4m (net of expenses) through the issue of 11,000,000 new ordinary shares.  I am extremely grateful for the support from our existing Shareholders and take the opportunity to also welcome new Shareholders.  A number of organic growth projects and potential bolt-on acquisitions had been identified prior to the placing.

 

In June 2017 the Company announced the acquisition of Selborne Care Limited for a total consideration of £16.6m in cash.  Selborne Care is a high quality provider of specialist residential care, supported living and day care services for adults with learning disabilities and challenging behaviours.  It has 57 residential beds in eight freehold sites and supported living services are provided to 30 service users.

 

In additional, the Group has purchased a number of properties including Beacon Reach, a Childrens Residential and Education facility near Preston for £4m, which is a substantial Education and Residential facility for ROC NW who recently won the Laing and Buisson Award in Social Care for Children's Services.

 

The Group continue to look at a number of other acquisition opportunities and are confident that the remainder of the share placement proceeds will be deployed in a timely manner and on earnings enhancing businesses or projects.

 

During 2017, we again closed several services for reconfiguration which impacted the growth in revenue.  Offsetting this, there are better fees following reconfiguration plus the impact of cost saving initiatives and the time and attendance system has further improved underlying EBITDA.  The Group's organic development programme will continue with further reconfigurations and, for 2018 we have a strong pipeline of development opportunities with two property purchases registered soon after the year end.

 

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 which was acquired in 2015.

 

In the 12 years since joining AIM, the business has transformed from being very focused on supporting adults with a learning disability through residential and day care settings to one where today we cater for young people and children with complex needs across a range of settings, be it residential, supported living or community support.  We focus on the most complex and vulnerable young people and the market for this client group stands at over £10bn. There is currently an undersupply of specialist beds in this niche area and the market is growing by almost 3% per annum.

 

Over the years we have developed a range of care pathways and helped many that we support to live more independently. This is a fantastic outcome for both us and the individuals that we support and it also helps local authorities meet the ever increasing cost of social care provision.

 

Even with the significant growth we have achieved to date we still have less than 2% of this very large and fragmented market. With the increasing regulatory burden, the opportunity for further consolidation is even more attractive.

 

Dividend

The Group policy has been to increase the total dividend per year broadly in line with the movement in underlying diluted earnings per share.

In 2017 there was a slight reduction in underlying diluted earnings per share of (0.01p) mainly due to the share placement in March 2017.  The Board has proposed a final dividend of 6.60p (2016: 6.25p) per share bringing the total dividend for the year to 9.90p (2016: 9.25p) per share.  This represents a full year increase of 7.0% year on year.  The final dividend will be paid, subject to shareholder approval, on 8 May 2018, with an ex-dividend date of 8 March 2018 and an associated record date of 9 March 2018.

Our Board

There have been no changes to the Board during the year.  Providing the foundation for further growth, the Senior Executive Team at CareTech has been further strengthened by a number of senior appointments during the year.

During the year the Remuneration Committee, the Audit Committee and the Care Governance and Safeguarding Committee were unchanged.

Our people

We have completed our planned evolution into two well defined operating divisions, Children Services and Adult Services, and this has generated organisational efficiencies. Simplifying the structure has also supported planning and service delivery with a more powerful approach to development.

Our continuing growth, measurable success and forward-looking approach are a reflection of the hard work and dedication of staff and managers throughout the organisation. I am always drawn to the achievements of our excellent front line staff, which is inevitable as we are first and foremost a care organisation.  Their care and commitment would be much less without the dedicated support of our administrators and support teams whose hard work and energy is critical to the success of our Company and the care we provide.

In March 2016, the Company announced the creation of the CareTech Sharesave Scheme, a Government supported method for any of our staff to have the opportunity to participate in the Company's equity.  In October 2017, we announced a second CareTech Sharesave Scheme and 259 members of staff chose to join this new saving scheme.  We plan to introduce another CareTech Sharesave Scheme in 2018 as this is one part of our staff retention strategy.

With the launch of the CareTech Charitable Foundation in May 2017 I am pleased that we will be able to support members of the CareTech family even more.  The Foundation has ambitious and clear sighted objectives to deliver meaningful impact to communities in the UK and overseas about which the staff of the Group and its service users feel proud and strongly-engaged, providing a unique contribution to the charitable marketplace consistent with the Group's values and approach.

Outlook and Prospects

We operate in a growing social care market worth over £10 billion per annum and we are well positioned to meet market demand.  We have developed outcome based care pathways which deliver value based services for our Local Authority partners.

 

With the money raised from shareholders, solid free cash flow generated from the business plus access to bank funding, we have major investment plans for 2018 and beyond with key new organic developments and bolt-on acquisitions. Importantly, we have also, and continue to, further strengthen our management team, offering a forceful blend of experience, commercial wisdom and dedication to care.  I have no doubt that the next few years will see continuing growth and care excellence which will help deliver our target of double digit growth in underlying EPS.

 

 

 

 

 

 

 

 

Farouq Sheikh

Chairman

7 December 2017

 



 

Chief Executive's Statement and Performance Review

A strong basis for advancement

Overview

It gives me considerable satisfaction to report again on a successful year that reflects the hard work of our management team, the enthusiasm of our staff and the support of our Board.

The Group has continued to build upon its solid foundations and remains in a strong position to continue as a leading provider of high quality specialist social care services in a large and growing UK market which remains fragmented.

The Group has continued to develop through organic growth and reconfigurations and, with the acquisition of Selborne Care Limited in June 2017 and it has gained an experienced management team with skilled leaders.  The new business has integrated and settled well, and our focus on organic growth also remains strong.

In 2017, I am extremely proud of the establishment of the CareTech Charitable Foundation which is devoted to supporting the social care sector. 

There have also been a number of staff initiatives to aid retention including the second Sharesave Scheme and a Level 5 in Care Management training scheme for Managers.

Consolidation and creating new opportunities

CareTech remains at the forefront of social care outsourcing in the UK across both Children and Adult services and, in the year, there has been a further increase in working closely with commissioners and regulators.

National public policy continues to be a significant driver of local authority commissioning intentions and behaviour. For a number of years, public policy has encouraged greater personalisation of health and social care for adults. Commissioners and leading providers are driving change that will mean offering people more choice and control over the care, treatment and support they receive while at the same time maintaining the quality and safety of those services.

Our care priorities drive successful outcomes for our service users and follow closely the guidance from central Government.

Our key focus for delivering quality services and positive outcomes is supported by the following key factors:

Communication 

·      We have open and frank dialogue with our service users, their families and social workers, as well as the Regulators.

 

Independence

·      In our social care and health contracts we aim to help our service users to return to an ordinary independent life. It may be children who can return to their birth families or live independently.  It may be adults who we can help on the pathway to recovery following a specialist services breakdown, or acquired brain injury or people with learning disability who we can support towards independent living.

 

Housing care and support

·      We know that most people aspire to have a place of their own, employment and ongoing support. We have structured our services, developing new provision and creative partnerships with housing providers to enable these aspirations to be achieved whenever possible and we are tailoring training to assist young people and adults leaving our services to gain employment.

 

Self-directed support 

·      It is pivotal to government policy that adults and children receiving social care are fully engaged in the support that they require. With some adults this extends to the provision of a cash sum enabling them to purchase their care and support directly. CareTech managers have been further reviewing our systems and delivering training throughout the organisation to ensure that we are able to deliver the requirements of self-directed support.

 

Quality and dignity

·      CareTech has always delivered high quality care in well maintained premises. However, we have never been complacent about this and have undertaken reviews to ensure that we deliver the right quality at a reasonable price. We have also learned a great deal from the experience of our NHS colleagues and developed a Dignity Test to ensure that our front line and administrative staff treat all our clients in ways that promote dignity.

 

Progress in the year

The year has seen continued progress as the Group concentrates on the introduction of innovative new services developed in partnership with local authority commissioners reconfigured from within our existing portfolio of properties or through new properties either purchased or rented for service users for supported living.

In June 2017 the Group acquired Selborne Care Limited for a total consideration of £16.6m in cash.  Selborne is a high quality provider of specialist residential care, supported living and day care services for adults with learning disabilities and challenging behaviours.  It had at acquisition 57 residential beds and 30 Supported Living Service Users.

Excluding Selborne Care our Adult Services have added a net 81 beds in the year, being 75 in Supported Living and 6 in Residential.

Children Services have added 49 beds in the year principally in 8 services.

The Group also continues to realise the benefit of organisational improvements put in place over the past few years. We have continued to strengthen our management structure with further senior appointments planned and to improve the efficiency of our processes following further investment in new systems which have gone live or we are working on now.  We are seeing the benefits of new executive appointments which continue to have a positive impact across the services.

New systems were procured during the year for the Group's recruitment and training solutions including e-learning with standard automated reports as well as for maintenance, hosting, data analytics and e-compliance in order to benefit from cutting edge technology.

These improvements have put us in a strong position to benefit from a number of the commissioning opportunities by working in partnership with the NHS and Local Authorities.

Care Pathway Range and Services

The Group's focus remains the provision of specialist social care through its five divisions.  This is underpinned by a well-defined range of provisions which meet the commissioner requirements.  These services are now even more extensive and focused on providing high quality care and positive outcomes for all of our service users.

The Group has continued to develop and grow its existing five operating divisions, which come under the two outcome-based sectors of Adult Services and Children Services. We continue to extend both our geographic coverage and our outcome-based Care Pathway range of services organically by acquisition and through the purchase of properties to meet the needs of our marketplace, specifically the requirement for greater acuity service provision for both Children and Young People and Adults. This ensures that CareTech is in a very strong position to address the demands of our evolving marketplace.

We remain committed to the growth of residential care solutions for adults and children with the most complex needs and the Group has embraced the development of home based solutions including foster care where demand for more specialist services remains strong. Our residential care services for children cater for young people with particularly difficult issues and offer a national service; with strong growth seen in the North of England with ROC Northwest which has expanded both in care and educational services.  In the year we have purchased properties in Scotland and North West England for both Spark of Genius and ROC Northwest to develop into new services.  Our adult services offer a solid and reliable provision across the whole spectrum of service offerings which now includes acquired brain injuries and we see a particular volume demand in the area of supported living, balanced by renewed demand for more specialised residential care solutions.

Our strategy is to offer a bespoke range of options so that we can maintain the Care Pathways that distinguish us from other providers.

Overview of progress

Our focus during the past year has continued to be further building on the businesses which established the Care Pathways whilst introducing innovative new solutions to meet the challenges faced by care commissioners and then adding newly acquired businesses with complementary skills.

Capacity has increased by 215 places principally because we have continued to reconfigure services and acquired Selborne Care Limited with its 87 places.  Occupancy levels within our mature services remain at a creditable 93%, or 86% when taking into account our services under development and transition.

Much has been written about personalisation and I felt it would be useful to set out our own understanding and commitment to personalisation.

Personalisation to us means recognising people as individuals who have strengths and preferences and putting them at the centre of their own care and support.

The traditional service-led approach has often meant that people have not been able to procure the kind of support they need, or receive tailored care assistance. Personalised approaches such as self-directed support and personal budgets involve enabling people to identify their own needs and make choices about how and when they are supported to live their lives.

Our two business divisions of Adult Services and Children Services comprise the following four Care Pathways and our Learning Services division.

1.         Adult Learning Disabilities

Year to 30 September 2017

Revenue

Contribution to Group Revenue

£87.7m (2016: £79.4m)

52.9% (2016: 53.3%)

Underlying EBITDA before unallocated costs

£26.3m (2016: £25.4m)

Capacity

1,735 (2016: 1,567)

 

Adult Learning Disabilities provides individually tailor-made solutions for people living in their own homes, residential care or independent supported living schemes.  We can work with clients to deliver self-directed support packages.

 

For some people residential care will continue as the preferred option and we increasingly offer several types of supported living and packages of individualised self-directed support to people in their own homes.

This includes adult residential care homes, independent supported living and community support services.

We have continued to work closely with Local Authority and NHS commissioners and this has helped us to achieve our growth through the past year. We take a long-term view, recognising that change will continue and with this in mind I am pleased to report that redevelopment of some of our long stay residential provision has been a great success over the past year and will continue to meet the changing requirements of commissioners and families.

The market for high acuity care and the support of people with learning disability is growing year on year. Demand for lower acuity support has been impacted by the cuts in local authority expenditure but this is not an area of activity in which CareTech operates. Conversely, resources for those with the highest level of need are being maintained and increased in some local authorities.

During the past year we have withdrawn 36 places in services for reconfiguration into new care models and have developed 47 beds through reconfiguration plus an additional 70 beds have been brought into service.

Further new provision is under development.

 

2.         Specialist Services

Year to 30 September 2017

 

Revenue

Contribution to Group Revenue

£15.5m (2016: £10.7m)

9.3% (2016: 7.2%)

Underlying EBITDA before unallocated costs

£3.9m (2016: £2.7m)

Capacity

214 (2016: 216)

 

In March 2016, Oakleaf Care (Hartwell) was acquired and added its range of pathways from rehabilitation through to long-term and end of life care for men with acquired brain injury.  This acquisition builds on the Group's existing neurological services and represents a further regional growth platform for the Group.  It has been put alongside the Mental Health Services to form the Specialist Services.

 

The reduction in capacity in Specialist Services arises because there have been a small number of beds reconfigured and transferred to Adult Learning Disabilities.

 

The principal reason for the increase in underlying EBITDA of £1.2m was due to Oakleaf Care (Hartwell) being included for the whole of 2017.

 

Specialist Services works in partnerships with the NHS to ensure a successful transition out of acute care, delivering pathways to independence. We have an outstanding track record for helping people away from acute care and supporting them in their own homes.

 

The adult services for this Care Pathway include a community based hospital, adult residential care homes, independent supported living and community outreach with some transitional services transferred within the Group.

Community Specialist Services has always been a critical but relatively neglected area of social care. However, this is changing as the NHS drives to lower bed capacity and accelerated early discharge from acute psychiatric hospital care.

The growth of social care is certain and the response by Government to one of the key difficulties is progressing.  There has been some progress in the removal of large numbers of learning disabled people from the controversial "Treatment and Assessment Centres" operating at various locations throughout the UK.  CareTech has never operated any centres of this type but we understand that the CEO of NHS England has been tasked with ensuring that these centres are re-provided as a matter of urgency.  CareTech is seeking opportunities to support the project and to offer a comprehensive solution within its community homes.

We are well positioned for expansion in Specialist Services and have a sustainable infrastructure to deliver growth including plans to provide care for women with acquired brain injury in 2018.

3.         Foster Care

Year to 30 September 2017

Revenue

Contribution to Group Revenue

£8.6m (2016: £8.7m)

5.2% (2016: 5.8%)

Underlying EBITDA before unallocated costs

£1.9m (2016: £2.2m)

Capacity

301 (2016: 301)

 

Foster Care provides for both mainstream and specialist foster care in small supportive groups across England and Wales for children with disabilities.  We also provide foster care family assessments in the home rather than in a residential setting.

The unchanged capacity, and fall in revenue and underlying EBITDA in Foster Care is due to the competitive nature of the market as well the change to family assessments in the home. It is also due to capacity being reported on the basis of the children that carers are able to look after rather than the number that they are approved for.

"Foster Care is on a rising trend in terms of both numbers placed in foster care and expenditure by local authorities."  Laing and Buisson 2013.

This trend is driven by cost considerations, where fostering is considerably less expensive than residential care and by perceived quality care factors.  It is generally held that fostering in an ordinary family home delivers better quality than any residential setting.  However, the rising tide of fostering has been constrained by the challenge of finding foster carers with the right skill and motivation alongside preference by social workers to place within local authority services rather than the independent sector.

In 2013, 46% of children placed in foster homes were outsourced to the independent sector.  This compares with 67% placed in residential homes operated by independent providers.

Our Foster Care teams and Young People Residential teams are working closing alongside each other to offer the best outcomes for Young People.

Our market intelligence suggests that most, if not all, independent sector fostering agencies are still experiencing some degree of "hold back" at present. However, the consensus view is that this will not last long and local authorities will inevitably return to progressive outsourcing of foster care provision.

Outsourcing is well established in the culture of most local authorities, but the current austerity measures have led a small number of authorities to reflect on the 50% fee premium paid for independent fostering. This disparity of cost can be attributed in part to the fact that the most complex and therefore high cost cases are placed in the care of independent providers. However, it is also clear that local authorities fail to undertake a full cost analysis of their in-house provision. Wherever this has been done, outsourcing is demonstrably much better value.

Demand for foster care has increased overall but we have noted an increasing trend among some local authorities to make provision in-house for all but the most complex children. In our view this is an expensive and unsustainable approach that exposes local authority commissioners to risk. Our own services are being maintained at an acceptable level. 

In October 2017 the All Wales Framework for the provision of foster care services outcome was that TLC (Wales) was ranked 1 and was placed in the New Tier 1.  This should really assist in the growth of TLC (Wales) due to the level of referrals now being received.

Looking forward we are training our foster carers with the skills required to manage more complex work and have linked the fostering division with our residential team for children so that we can maintain an effective care pathway.

4.         Young People Residential Services

Year to 30 September 2017

Revenue

Contribution to Group Revenue

£43.8m (2016: £39.0m)

26.4% (2016: 26.2%)

Underlying EBITDA before unallocated costs

£13.2m (2016: £11.8m)

Capacity

284  (2016: 235)

 

A number of children and young people need to live in specialised residential services and receive education.  As far as practicable we aim to help these children move into a more normalised family style environment.

This segment contains children residential care homes, which includes facilities for children with learning difficulties and emotional behavioural disorders ("EBD"), and small specialist schools.

In December 2015 ROC Northwest was added and gave a further geographic spread to fit between the current Children residential services in Scotland (Spark of Genius and ACAD) and North Wales (Branas Isaf) and services in Staffordshire and Yorkshire.  It also strengthened the residential care and education services for young people with complex needs, especially EBD.

In the year this segment benefited from new services which have added 49 beds to capacity with additions to Spark of Genius, ROC Northwest and the original Childrens services. 

Spark of Genius which provides significant benefits across the division due to their well-established education facilities across Scotland and North East England which complement the ROC Northwest and Welsh education facilities.  In the year the Education capacity increased by 46 to close at 312 Young People.

At the Laing Buisson Awards in November 2017 the winners in Social Care for Children's Services was ROC Northwest.

Children residential services have been growing as our reputation for quality care and support spreads. We are currently developing new beds and places that have been commissioned during the past year.

 

 

 

 

5.         Learning Services

Year to 30 September 2017

Revenue

Contribution to Group Revenue

£10.4m (2016: £11.2m)

6.2% (2016: 7.5%)

Underlying EBITDA before unallocated costs

 

£0.9m  (2016:£1.0m)

 

Learning Services comprises EQL Solutions which was acquired in 2013 and is a national provider specialising in employment and training services to young people and adults and Dawn Hodge Associates, a regional provider specialising in the social care sector, was acquired in 2016.

Their intensive pre-employment, development and apprenticeship programmes use public funds from the Skills Funding Agency to lay the foundations for individuals to achieve their career goals while helping to provide businesses with the vital skills they need in their workforce.

As well as supporting the workforce, Learning Services has also developed programmes for service users by enhancing the pathways to independent living and employment. Young People leaving care, for example, often do not know where to find the right job opportunities or have the opportunity to access employer-focused training. We can now bridge that gap by supporting young people as they make the transition to adult life. We are also exploring how best to help individuals return to employment after mental illness and to give people with learning disabilities the skills and confidence to gain employment so that they are able to live more independently.

Good progress has been made in identifying the potential for Learning Services to add value to CareTech's attraction and recruitment of staff and their retention, helping new employees gain the skills and qualifications to grow a successful career in care through an Apprenticeship.

The Aspire programme developed as a unique and innovative scheme that will ensure all CareTech's support workers receive mandatory and statutory training to the highest standard whilst also being offered the opportunity to complete a Level 2 or Level 3 Apprenticeship which has been carefully tailored to suit their role and 140 completed this apprenticeship in the last academic year.

CareTech apprentices continue their training with 321 CareTech support workers undertaking the apprenticeship programme.

The Team Leader programme has 47 staff members on Level 5 programmes.

In early 2016 Dawn Hodge Associates retained its Ofsted "Outstanding" which is an achievement that we are very pleased to have attained and provides an excellent base to build upon.

During 2017 with the introduction of the Apprenticeship Levy there have been significant changes to the Learning sector, but we believe that we are well placed to take advantage of the new market conditions.

However, both EQL Solutions and Dawn Hodge Associates faced a challenging start to the new Learning sector year.  A reorganisation of the management of the division was undertaken and the budget for the rest of 2018 show an improvement on last year.

 

 

 

Haroon Sheikh

Chief Executive Officer

7 December 2017



Financial Review

The Group has continued to make good progress in 2017, and has raised additional funds through a share placement for further acquisitions.  Having made one acquisition in the year, the Group is well placed to make further acquisitions and continue the growth in 2018.

Results

Underlying operating profit improved by 6.9% at £34.2m compared with £32.0m last year.  Until 2013 the Group had been making strategic acquisitions to gain market share and extend the care pathway range of services.  Since 2013 the focus had been on both organic development and cost efficiencies as well as acquisitions.  With two share placements, improved banking facilities and a Ground Rent fund transaction the Group has raised £87m which has been used for acquisitions with four completed in the last two years and one more during 2017. 

Underlying basic earnings per share remained at 38.03p (2016: 38.03p).  In the year underlying profit before taxation increased by 12.6% and underlying profit after tax has risen by 10.8% to £26.6m (2016: £24.0m) due in part to the increase in the effective tax rate. The placing on 23 March 2017, which raised £37.4m (net of expenses) for acquisitions increased the number of shares by 11.0m so the weighted average number of diluted shares rose to 70.1m (2016: 63.2m) being an increase of 10.9%. Basic and diluted earnings per share decreased by 29.55% to 25.48p (2016: 36.17p) and profit after tax reduced by 22.3% to £17.8m (2016: £22.9m).

Cash inflows from operating activities before tax and non-underlying items paid were £32.7m (2016: £34.2m), a reduction of 4.4%.  Net debt to the Group's bankers (as defined on page 1) at the year end of £147.1m has reduced by £9.3m for the year (2016: £156.4m).

The Condensed Income Statement before non-underlying items for the year is summarised in table 1 below.

Table 1 -Condensed Income Statement before non-underlying items

 


2017

2016



£m

£m

Growth

Revenue

166.0

149.0

11.4%

Gross profit

59.9

54.3


Administrative expenses excluding depreciation and share based payments

(20.0)

(17.2)


Underlying EBITDA

39.9

37.1

7.5%

Underlying EBITDA margin

24.0%

24.9%


Depreciation

(5.5)

(5.0)


Share-based payments charge

(0.2)

(0.1)


Underlying operating profit

34.2

32.0

6.9%

Net financial expenses

(4.8)

(5.9)


Underlying profit before tax

29.4

26.1

12.6%

Underlying taxation

(2.8)

(2.1)


Underlying effective tax rate

9.3%

7.8%


Underlying profit for the year

26.6

24.0


Weighted average number of diluted shares (millions)

70.1

63.2


Underlying basic earnings per share

38.03p

38.03p


Full year dividend per share

9.90p

9.25p


 

 

 

Revenue

Revenue of £166.0m (2016: £149.0m) was 11.4% higher than in 2016.

 

In the year there was the acquisition of Selborne and revenue includes £3.9m from this acquisition.

   

In the established Adult Learning Disabilities segment we continued to experience high levels of occupancy and reported 93% occupancy at 30 September 2017.  When this is blended with the facilities that are being reconfigured and so are under development, the overall occupancy level during the second half of the year and at 30 September 2017 was 86% of capacity (September 2016: 86%).  As in recent years the demand for residential services continues to be encouraging for high acuity users.

As set out in the Chief Executive's statement and note 2 to the Preliminary Announcement, we are again reporting segmental information for the financial year and last year which includes information on client capacity and revenue for each segment.  Specialist Services has been created from the old Mental Health Services plus the ABI business Oakleaf Care acquired in March 2016, Adult numbers have been restated.

The continued development of our care pathways and a growing range of service options has led to the proportion of Adult services revenue rising from 60.5% in 2016 to 62.2% in 2017 and underlying EBITDA before Group Costs moving from 65.2% in 2016 to 65.4% in 2017.

The Young People Residential services total revenue has risen by 12.3% with Specialist Services growing by 44.9%, Foster Care falling by 1.1% and Learning Services by 7.1%.  Their total proportion of the EBITDA before Group costs has moved from 34.8% in 2016 to 34.6% in 2017 due mainly to the acquisitions in the Adult Division Services.

Table 2 - Revenue


2017

2017

2016

2016


 

Revenue

Underlying

EBITDA

 

Revenue

Underlying

EBITDA


£m

£m

£m

£m

Adult Learning Disabilities

87.7

26.3

79.4

25.4

Specialist Services

                15.5

                   3.9

                10.7

                2.7

Adults Services

              103.2

                 30.2

                 90.1

                 28.1

Young People Residential Services

Foster Care

43.8

8.6

13.2

1.9

39.0

8.7

11.8

2.2

Learning Services

                10.4

                   0.9

                11.2

                   1.0

Childrens Services

                62.8

                16.0

                58.9

                 15.0

 

Less unallocated Group costs

 

-

 

(6.3)

 

-

 

(6.0)


               

               

               

               


166.0

39.9

149.0

37.1


               

               

               

               

 

 



 

Underlying EBITDA and total EBITDA

 

Underlying EBITDA has grown by 7.5% from £37.1m in 2016 to £39.9m in 2017.  Underlying EBITDA includes £0.5m from the acquisition of Selborne Care Limited.  Underlying EBITDA margin has decreased from 24.9% to 24.0% mainly due to the margin in the total of the acquired businesses being at a lower rate than the other businesses, and the growth in services businesses that require little capital expenditure like Foster Care and the Learning Division.

 

The Adult Learning Disabilities, Specialist Services and Young People Residential Services segments have higher margins but normally require considerable capital expenditure to increase capacity, whilst Supported Living, Foster Care and Learning Services operate at a lower margin in part because they do not require capital expenditure to increase capacity and are not reliant on the Group's properties.

 

Administrative expenses, before depreciation and share-based payments charges were £20.0m (2016: £17.2m) and increased by £2.8m during the year.  In 2016 they represented 11.5% of Group revenue and in 2017 this further increased to 12.0% of Group revenue.

 

There has been a further considerable effort in the year to tighten administrative expenses with further back office systems centralisation and procurement successes for the Group.

 

The reconfiguration of services is a central part of the Board's strategy to grow organically. It enhances average fee rates and maintains the Group's reputation as a provider of highest quality of care.

 

In the year there has also been a greater focus on purchasing properties which are then converted to new services.

 

The number of employees in management and administration has increased by 17 as a result of both the acquisition in the year as well as organic growth. The Time and Attendance system has been implemented across all of the residential services in the year which will further our back office centralisation and ensure that staff are paid more accurately and quickly, as well as giving reliable data on staff rotas and attendance in each service.  A new integrated Recruitment system has been implemented in the year.

 

Total EBITDA has reduced from £41.3m in 2016 to £35.6m in 2017.

 

Operating profit and profit before tax

The depreciation charge is £5.5m (2016: £5.0m) and reflects the investment in land and buildings, motor vehicles and fixtures, fittings and equipment.

After this charge and the share-based payments, underlying operating profit grew 6.9% to £34.2m (2016: £32.0m).

Total operating profit decreased by 25.6% to £22.7m (2016: £30.5m).

Net underlying financial expenses of £4.8m (2016: £5.9m) decreased again over the previous year due to the effects of the share placement monies and the new banking facilities, though there were additional finance leases taken out on new home vehicles during the year.

Underlying profit before tax was £29.4m (2016: £26.1m) which is an increase of 12.6%.

Total profit before tax decreased by 25.3% to £16.8m (2016: £22.5m).

Taxation and diluted earnings per share

The effective underlying tax rate was 9.3% (2016: 7.8%) and reflects management's expectations of future capital investment through organic developments and reconfigurations relative to available capital allowances, the impact of the reduction in the main rate of corporation tax in the year and also the release of a provision for tax no longer required.

The weighted average number of shares in issue rose by 10.8% mainly due to the share placement in March 2017.  The underlying basic earnings per share remained at 38.03p in 2017 from 38.03p in 2016.

 

Basic and diluted earnings per share reduced by 29.6% to 25.48p (2016: 36.17p)

 

Dividends

 

Our policy has been to increase the total dividend per year broadly in line with the movement in underlying diluted earnings per share.  The final dividend will therefore increase to 6.60p per share (2016: 6.25p), bringing the total dividend for the year to 9.90p (2016: 9.25p), a growth of 7.0%.  Dividend cover for 2017, based upon diluted earnings per share before non-underlying items is 3.84 times (2016: 4.11 times).

Non-underlying items

As more fully explained on the face of the Consolidated Statement of Comprehensive Income and in note 3 to the Accounts, the Directors have separately disclosed a number of non-underlying items in order to improve understanding of the underlying trading performance achieved by the Group.  Total non-underlying items represent a net charge of £11.4m at operating level (2016: £1.5m) and the principal items are the amortisation of intangible assets and integration and reorganisation costs plus costs of the acquisition.  In 2016 non-underlying items were stated net of the IAS 17 profit of £5.6m arising from the ground rent transaction.

Cash flow and net debt

 

The cash flow statement and movement in net debt as defined on page 15 to the Group's bankers for the year is summarised below:

 

 

 


2017

2016


£m

£m

Underlying EBITDA

39.9

37.1

 (Increase) in working capital

(7.2)

(2.9)


               

               

Cash inflows from operating activities before non-underlying items

32.7

34.2

Tax paid

(6.3)

(1.5)

Interest paid

(5.0)

(5.5)

Dividends paid

(5.9)

(5.2)

Acquisitions and capital expenditure

(36.4)

(41.9)

Share Placement

37.4

-

Ground rent transaction

-

29.9


               

               

Cash flow before adjustments

16.5

10.0

Non-underlying cashflows including derivative financial instruments

 

(7.2)

 

(7.9)


               

               

Movement in net debt to the Group's bankers

9.3

2.1

Opening net debt to the Group's bankers

(156.4)

(158.5)


               

               

Closing net debt to the Group's bankers

(147.1)

(156.4)


               

               

 

 

Net debt to the Group's bankers at 30 September 2017 of £147.1m (2016: £156.4m) has decreased by £9.3m during the financial year, with an investment of £36.4m in acquisitions and capital improvements during the year.

 

Operating cash flows before non-underlying items

 

The £32.7m (2016: £34.2m) cash inflow from operating activities, before non-underlying items, represents an 82% (2016: 92%) underlying EBITDA cash conversion ratio.

 

 

 

 

Interest and dividend cash flows

 

Interest paid of £5.0m (2016: £5.5m) is reflective of the financial expenses per the Consolidated Statement of Comprehensive Income, whilst dividends paid are consistent with the relevant section earlier in the review.

 

Acquisitions and capital expenditure

 

During the year we invested total funds of £36.4m (2016: £41.9m) on an acquisition and capital expenditure.  The Group acquired Selborne Care Limited in June 2017 for a total consideration of £16.6m in cash.  The acquisition utilised part of the £37.4m share placement monies raised in March 2017 and there are plans for further acquisitions.

 

Further details of the acquisitions are explained in the Chief Executive's Statement and Performance Review as well as in the notes to the financial statements.

 

Capital expenditure of £19.8m (2016: £14.3m) includes £10.9m to update our portfolio of assets.

 

Banking arrangements

 

The Group is pleased to have continued its strong relationships with Royal Bank of Scotland, Lloyds TSB, Santander and Allied Irish following the last refinancing in July 2016 when the Group agreed improvements to its banking facilities.  The facility was extended to January 2019 and the cost of borrowing was reduced through a reduction in the interest rate.  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 10 October 2017 until January 2019.  In total four loan repayments, which were due between 2016 and October 2017 amounting to £21.6m, have been deferred.  In addition, there is an uncommitted accordion facility of up to £30m which, together with the deferral of loan repayments, give further support to the Group's acquisition strategy.  It is planned to undertake the re-financing in the first half of 2018 when the most appropriate and cost effective types of funding will be considered.

The total of the Group's current freehold property portfolio is £329m as at 30 September 2017 (2016: £304m).  There was an independent valuation by Christie & Co of the Group's property portfolio of £284m following the ground rent transaction in February 2016 and this increased by £20m in the period to September 2016 due to the cost price of the freehold properties purchased in the 2 acquisitions and other freehold properties purchased.  In the year to September 2017 freehold properties increased by £23.2m with the cost price of the Selborne Care Limited freehold properties being £12.3m and other properties purchased in the year £10.9m.

At 30 September 2017 the Group has available bank facilities totalling £195m which are sufficient, with cash flow from operating activities, to fund present commitments.  The Bank loans not drawn are £16.1m and the £30.0m accordian facility has not been utilised.

Outlook

The Group is now in a better position than ever before to continue its growth as a pioneering provider of specialist social care services in a UK market which is continuing to grow yet remains fragmented.

 

 

Michael Hill

Group Finance Director

7 December 2017

Unaudited Consolidated Statement of Comprehensive Income

for the year ended 30 September 2017

 


2017

2016



Underlying

Non- underlying (i)

Total

Underlying

Non- underlying (i)

Total


Note

£000

£000

£000

£000

£000

£000









Revenue

2

166,018

-

166,018

148,979

-

148,979

Cost of sales


(106,110)

-

(106,110)

(94,682)

-

(94,682)



              

              

              

              

              

              

Gross profit


59,908

-

59,908

54,297

-

54,297









Administrative expenses


(25,758)

(11,483)

(37,241)

(22,328)

(1,510)

(23,838)



              

              

              

              

              

              

Operating profit


34,150

(11,483)

22,667

31,969

(1,510)

30,459









EBITDA (ii)


39,885

(4,293)

35,592

37,056

4,233

41,289

Depreciation


(5,525)

-

(5,525)

(5,026)

-

(5,026)

Amortisation of intangible assets



(7,190)

(7,190)

-

(5,743)

(5,743)

Share-based payments charge


(210)

-

(210)

(61)

-

(61)



              

              

              

              

              

              

Operating profit


34,150

        (11,483)

22,667

31,969

(1,510)

30,459









Financial expenses


(4,770)

(1,118)

(5,888)

(5,887)

(2,037)

(7,924)



              

              

              

              

              

              

Profit before tax


29,380

(12,601)

16,779

26,082

(3,547)

22,535









Taxation

3,4

(2,744)

3,814

1,070

(2,035)

2,371

336



              

              

              

              

              

              

Profit and comprehensive income for the year attributable to equity shareholders of the parent


26,636

(8,787)

17,849

24,047

(1,176)

22,871



              

              

              

              

              

              

Earnings per share








Basic

Diluted

5,6

5,6

38.03p

38.02p


25.48p

25.48p

38.03p

38.03p


36.17p

36.17p

 

(i)     Non-underlying items comprise: amortisation of intangibles, acquisition expenses, fair value adjustments on acquisitions, changes in value and additional finance payments in respect of derivative financial instruments, integration, reorganisation and redundancy costs and provision for onerous leases.  See note 3.

(ii)    EBITDA is operating profit stated before depreciation, amortisation of intangible assets and share-based payments charge.

 

 

.

 

 

 

 

 

 

Unaudited Consolidated Statement of Financial Position  

as at 30 September 2017



2017

2016



£000

£000

Non-current assets




Property, plant and equipment


297,170

267,667

Other intangible assets


40,954

43,982

Goodwill


43.098

43,021



              

              



381,222

354,670



              

              

Current assets




Inventories


835

815

Trade and other receivables


23,519

18,508

Cash and cash equivalents


6,402

4,308



              

              



30,756

23,631



              

              

Total assets


411,978

378,301

 

Equity




Share capital


379

321

Share premium


120,778

81,750

Shares held by Executive Shared Ownership Plan


(4,750)

(6,072)

Merger reserve


9,023

9,023

Retained earnings


78,771

66,645



              

              

Total equity


204,201

151,667



              

              

Liabilities

Non-current liabilities




Loans and borrowings


145,872

153,742

Ground rent liabilities arising under IAS17


7,294

7,343

Deferred tax liabilities


17,843

21,552

Deferred and contingent consideration payable


1,133

2,025

Derivative financial instruments


172

964



              

              



172,314

185,626



              

              

Current liabilities




Loans and borrowings


7,662

6,990

Trade and other payables


15,709

17,666

Ground rent liabilities arising under IAS17


50

50

Deferred and contingent consideration payable


2,420

3,850

Deferred income


1,762

2,119

Corporation tax


7,092

9,250

Derivative financial instruments


768

1,083



             

             



35,463

41,008



              

              

Total liabilities


207,777

226,634



              

              

Total equity and liabilities


411,978

378,301



              

              



 

Unaudited Consolidated Statement of Changes in Equity

 as at 30 September 2017

 
















 

Share

capital

 

Share

premium

Shares held by Executive Shared Ownership Plan

 

Merger

reserve

 

Retained

earnings

 

Total

equity


£000

£000

£000

£000

£000

£000

At 1 October 2015

311

76,985

(1,280)

8,748

48,935

133,699








Profit for the year

-

-

-

-

22,871

22,871








Total comprehensive income

-

-

-

-

22,871

22,871


              

              

              

              

              

              

Issue of ordinary shares

10

4,765

(4,792)

275

-

258

Equity settled share-based payments charge





61

61

Dividends

-

-

-

-

(5,222)

(5,222)








Transactions with owners recorded directly in equity

10

4,765

(4,792)

275

(5,161)

(4,903)


              

              

              

              

              

              

At 30 September 2016

321

81,750

(6,072)

9,023

66,645

151,667















At 1 October 2016

321

81,750

(6,072)

9,023

66,645

151,667








Profit for the year

-

-

-

-

17,849

17,849








Total comprehensive income

-

-

-

-

17,849

17,849















Issue of ordinary shares

58

39,028

1,322

-

-

40,408

Equity settled share-based payments charge

-

-

-

-

210

210

Dividends

-

-

-

-

(5,933)

(5,933)


              

              

              

              

              

              

Transactions with owners recorded directly in equity

58

39,028

1,322

-

(5,723)

34,685


              

              

              

              

              

              

At 30 September 2017

379

120,778

(4,750)

9,023

78,771

204,201

 

 


              

              

              

              

              

              

 



 

Unaudited Consolidated Statement of Cash Flow

 for the year ended 30 September 2017


Note

2017

2016



£000

£000

Cash flows from operating activities




Profit before tax


16,779

22,535

Adjustments for:




Financial expenses


5,888

7,924

Onerous lease provision charge


287

-

Depreciation


5,525

5,026

Amortisation


7,190

5,743

Share-based payments charge


210

61

Acquisition transaction cost


806

660

Costs arising from placement of shares


348

-

Integration and restructuring costs


2,852

1,780

Profit on disposal of property, plant and equipment


-

(5,623)







              

              

Operating cash flows before movement in working capital

Increase in inventory


39,885

(20)

38,106

       (253)

Increase in trade and other receivables


(2,641)

(3,498)

Decrease in trade and other payables


(4,519)

(163)



              

              

Operating cash flows before adjustment items


32,705

34,192

Integration and restructuring costs


(4,006)

(1,780)

Payments made under onerous contracts


(287)

-



              

              

Cash inflows from operating activities


28,412

32,412

Tax paid


(6,295)

(1,458)



              

              

Net cash from operating activities


      22,117

30,954



              

              

Cash flows from investing activities




Proceeds from sale of property, plant and equipment


200

29,854

Payments for business combinations net of cash acquired


(16,586)

(27,603)

Acquisition of property, plant and equipment


(15,888)

(10,765)

Acquisition of software


(3,867)

(3,580)

Payment of acquisition costs


(1,419)

 

(3,654)

 

 



   

   

Net cash used in investing activities


(37,560)

 

 

(15,748)

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Unaudited Consolidated Statement of Cash Flow (continued)

for the year ended 30 September 2017


Note

2017

2016



£000

£000





Proceeds from the issue of share capital (net of costs)


37,829

75

Interest paid


(4,955)

(5,544)

Cash outflow arising from derivative financial instruments


(776)

(779)

Bank loans drawdown


30,911

27,507

Repayment of borrowings


(37,400)

(28,377)

Payment of finance lease liabilities


(2,139)

(2,260)

Dividends paid

7

(5,933)

(5,222)



              

              

Net cash arising from/(used in) financing activities


17,537

(14,600)



              

              

Net increase in cash and cash equivalents


2,094

606

Cash and cash equivalents at 1 October


4,308

3,702



              

              

Cash and cash equivalents at 30 September


6,402

4,308



              

              

 

 

 




 

 

 

 

 

 

 



 

Notes to the Financial Statements

 

1          Background and basis of preparation

 

CareTech Holdings PLC (the 'Company') is a company registered and domiciled in England and Wales. The consolidated financial statements of the Company for the year ended 30 September 2017 comprise the Company and its subsidiaries (together referred to as the 'Group').

 

The unaudited summary financial information set out in this announcement does not constitute the Company's consolidated statutory accounts for the years ended 30 September 2017 or 30 September 2016. The results for the year ended 30 September 2017 are unaudited. The statutory accounts for the year ended 30 September 2017 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement, and will be delivered to the Registrar of Companies in due course. The statutory accounts are subject to completion of the audit and may change should a significant adjusting event occur before the approval of the Annual Report.

 

The statutory accounts for the year ended 30 September 2016 have been reported on by the Company's auditors and delivered to the Registrar of Companies. The auditors report on those accounts was unqualified and did not include references to any matter which the auditors drew attention by way of emphasis without qualifying their report and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

 

The preliminary announcement for the year ended 30 September 2017 was approved by the Board for release on 7 December 2017.

 

2          Segmental information

 

IFRS 8 requires operating segments to be determined based on the Group's internal reporting to the Chief Operating Decision Maker ("CODM"). The CODM has been determined to be the Chief Executive Officer as he is primarily responsible for the allocation of resources to segments and the assessment of the performance of each of the segments.

 

The CODM uses underlying EBITDA as reviewed at monthly Executive Committee and Performance meetings as the key measure of the segments' results as it reflects the segments' underlying trading performance for the period under evaluation. Underlying EBITDA is a consistent measure within the Group.

 

Inter-segment revenue between the operating segments is not material.

 

Our two key segments are Adult Services (Adult) and Children Services (Children).  Adult Services comprises the Adult Learning Disabilities (ALD) and Specialist Services (SS) divisions and the Children Services comprises Young People Residential Services (YPR), Foster Care (FC) and Learning Services (Learning).

 

There has been no aggregation of the operating segments in arriving at these reportable segments. 

 

The segment results for the year ended 30 September 2017, for the year ended 30 September 2016 and the reconciliation of the segment measures to the respective statutory items included in the consolidated financial information are as follows:

 

Year ended 30 September 2017

 

Continuing Operations

ALD

SS

Adult

YPR

FC

Learning

Children

Total

 

Client Capacity

1,735

214

1,949

284

301

-

585

2,534

 

Revenue (£'000)

87,752

15,486

103,238

43,798

8,626

10,356

62,780

166,018

 

Underlying EBITDA (£'000)

26,331

3,862

30,193

13,205

1,870

960

16,035

46,228

 

Before allocated cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended 30 September 2016

 

 

 

 

 

 

 

 

 

Continuing Operations

ALD

SS

Adult

YPR

FC

Learning

Children

Total

 

Client Capacity

*1,567

*216

1,783

235

301

-

536

   2,319

 

Revenue £'000)

79,445

10,654

90,099

38,980

8,714

11,186

58,880

148,979

 

Underlying EBITDA (£'000)

25,383

2,676

28,059

11,806

2,187

1,013

15,006

43,065

 

Before allocated cost









*The segmental figures of the Specialist Services division for 2016 have been restated due to the inclusion of "ABI" (Acquired Brain Injury). This is the first full year of Oakleaf Care Limited's results and it was decided this change would give the shareholders greater clarity.

Reconciliation of EBITDA to profit after tax;


2017

2016



£000

£000





Underlying EBITDA before unallocated costs


46,228

43,065

Unallocated costs


(6,343)

(6,009)

Underlying EBITDA


39,885

37,056

Depreciation


(5,525)

(5,026)

Amortisation


(7,190)

(5,743)

Share based payments charge


(210)

(61)

Non-underlying items


(4,293)

4,233

Operating profit


22,667

30,459

Financial expenses


(5,888)

(7,924)

Profit before tax


16,779

22,535

Taxation


1,070

336

Profit after tax


17,849

22,871

 

All operations of the Group are carried out in the UK, the Company's country of domicile. All revenues therefore arise within the UK and all non-current assets are likewise located in the UK. No single external customer amounts to 10% or more of the Group's revenues.

 

3          Non-underlying items

 

Non-underlying items are those items of financial performance that, in the opinion of the Directors, should be disclosed separately in order to improve a reader's understanding of the underlying trading performance achieved by the Group as these are one off significant costs which are not part of the ordinary course of the business. Non-underlying items comprise the following:



2017

2016


Note

£000

£000





Acquisition expenses

(i)

806

(390)

Integration and restructuring costs

Profit arising from the ground rent transaction under IAS 17

(i)

 

2,852

-

1,780

(5,623)

Costs arising from placement of shares


348

-

 



              

              

 

Acquisition and development costs


4,006

(4,233)

Onerous lease provision

(ii)

287

-



              

              

 

Included in EBITDA


4,293

(4,233)

Amortisation of intangible assets


7,190

5,743



              

              

 

Included in administrative expenses


11,483

1,510



              

              

 

Fair value movements relating to derivative financial instruments

(iii)

(1,107)

1,258

Other financing cost relating to ground rent


1,173

-

Charges relating to derivative financial instruments

IAS 17 lease imputed interest

 

 

 

829

223

646

133



              

              

 

Included in financial expenses


1,118

2,037



              

              

 

Tax on non-underlying items




Current


(1,138)

(84)

Deferred tax

(iv)

(2,676)

(2,287)



              

              

 

Included in taxation


(3,814)

(2,371)



              

              

 

Total non-underlying items


8,787

1,176



              

              

 





 

(i)  The Group incurred a number of exceptional costs relating to the integration of recent acquisitions and the reorganisation of the internal operating and management structure and redundancy costs totalling £2,852,000 (2016: £1,780,000).  Included in the cash flow statement are acquisition expenses of £806,000 (2016: £660,000) and integration and reorganisation costs of £2,852,000 (2016: £1,780,000), which were paid in the year.

(ii) The present value of the future cash flows receivable from the operation of certain leased assets has been assessed as being lower than the present value of the rental payments to which the Group is committed.  Therefore, the Group has provided for £287,000 (2016: £nil) being the present value of any onerous element of the remaining lease life. 

(iii)  Non-underlying items relating to derivative financial instruments include the movements during the year in the fair value of the Group's interest rate swaps which are not designated as hedging instruments and therefore do not qualify for hedge accounting, together with the quarterly cash settlement, and accrual thereof.

(iv)  Deferred tax arises in respect of the following:


2017

2016

 


£000

£000

 

Derivative financial instruments

(188)

190

 

Full provision for deferred tax under IAS 12

(981)

1,184

 

Intangible assets

730

-

 

Roll over relief

14

-

 

Prior year adjustment

3,101

-

 

Other adjustments

-

913

 


              

              



2,676

2,287

 


              

              

 

 

4              Taxation

 

(a) Recognised in the consolidation statements of comprehensive income

2017

2016


£000

£000

Current tax expense



Current year

(4,809)

(4,471)

Current tax on non-underlying items (note 3)

1,114

84

Corporation tax overprovided in previous periods

(56)

2,281


              

              

Total current tax

(3,751)

(2,106)


              

              

Deferred tax expense



Current year

825

(1,027)

Prior year

1,320

1,182

Deferred tax on non-underlying items (note 3)

       2,676

2,287


              

              

Total deferred tax

4,821

2,442


              

              

Total tax in the consolidated statement of comprehensive income

1,070

336


               

               

(b) Reconciliation of effective tax rate


2017

2016


£000

£000




Profit before tax for the year

16,779

22,535


              

              

Tax using the UK corporation tax rate of 19.5% (2016: 20%)

3,272

4,507

Non-deductible expenses

636

(820)

Other tax adjustments

(613)

(1,284)

Corporation and deferred  tax overprovided in previous periods

(4,365)

(2,692)

Utilisation of brought forward losses

-

(47)


              

              

Total tax in the consolidated statement of comprehensive income

(1,070)

(336)

 

 

              

              

5        Earnings per share        


2017

2016


£000

£000




Profit attributable to ordinary shareholders

17,849

22,871


                  

                  

Weighted number of shares in issue for basic earnings per share

70,037,602

63,229,346

Effects of share options in issue

24,389

-


                  

                  

Weighted number of shares for diluted earnings per share

70,061,991

63,229,346


                  

                  

 

Diluted earnings per share is the basic earnings per share adjusted for the dilutive effect of the conversion into fully paid shares of the weighted average number of share options outstanding during the period.

 

Earnings per share (pence per share)



  Basic

25.48p

36.17p

  Diluted

25.48p

36.17p


              

              

 

 

 

6          Underlying earnings per share

A measure of underlying earnings and underlying earnings per share has been presented in order to present the earnings of the Group after adjusting for non-underlying items which are not considered to reflect the underlying trading performance of the Group.

 


2017

2016


£000

£000




Profit attributable to ordinary shareholders

17,849

22,871

Non-underlying items (note 5)

8,787

1,176


              

              

Underlying profit attributable to ordinary shareholders

26,636

24,047


              

              

 

Underlying earnings per share (pence per share)



  Basic

38.03p

38.03p

  Diluted

38.02p

38.03p


              

              

7        Dividends

The aggregate amount of dividends comprises:


2017

2016


£000

£000

Interim dividend paid in respect of prior year but not recognised as liabilities in that year (3.00p per share (2016: 3.00p per share))

1,923

1,739

Final dividend paid in respect of the prior  year (6.25p per share (2016: 5.60p per share))

4,010

3,483


              

             

Aggregate amount of dividends paid in the financial year (9.25p per share (2016: 8.40p per share))

5,933

5,222


              

             

The aggregate amount of dividends proposed and not recognised as liabilities as at the year end is 9.90p per share, £7,493,075 (2016: 9.25p per share, £5,938,214).

 

8          Business Combinations

(a)        Acquisitions 2017

The Group made one acquisition in the year which has been accounted for as business combinations under IFRS3 (revised). 

The following table of fair values summarises the acquisition made during the financial year:

On 19 June 2017 the Group acquired the equity of Selborne Care Limited, which provides a range of supported living, residential care and day opportunity services in Birmingham, Sandwell, Coventry and Warwickshire, Worcestershire, Wolverhampton, Bristol, South Gloucestershire, Bath and North East Somerset, Devon Plymouth and Cornwall. 

 

The book values attributable to the acquisition were £18,281,289 net assets and fair value adjustments were £4,397,000.


Book values

Fair value

adjustment

Total


£000s

£000s

£000s

Intangible assets

296

-

296

Property plant & equipment

12,571

4,997

17,568

Trade and other receivables

989

(250)

739

Cash

2,590


2,590

Trade and other payables

(1,526)

(350)

(1,876)

Deferred Tax

(1,113)


(1,113)

Net Assets on acquisition

13,807

4,397

18,204

 

The Acquisition accounting is draft and will be finalised when the properties have been revalued and any separate identifiable intangibles (such as customer relationships) will be adjusted in next year's financial statements.

 

Satisfied as follows:

Cash

18,281


18,281

Goodwill



77





 

 

The acquisition was undertaken to enhance the Group's position in the respective industries.  Control was obtained through the acquisition of share capital.

 

The book values of the assets and liabilities were extracted from the underlying accounting records of the acquired entities on the date of acquisition.  The book value of receivables represents the gross contractual amounts receivable, all of which are considered recoverable.  The fair value adjustments made to property, plant and equipment, trade and other receivables and creditors are to reflect their value on a going concern market value basis.  The remaining goodwill of £77,000 relates to the assembled workforce acquired on acquisition.

 

Goodwill which is not expected to be tax deductible arises due to the requirement to recognise deferred tax in respect of the fair value adjustments to intangible assets and property, plant and equipment, together with synergies expected to arise from combining operations, workforce in place and other intangible assets which do not qualify for separate recognition.

 

(b)        Reconciliation to Group Cash Flow

 


2017

£000

2016

£000

 

Cash consideration paid on acquisitions in the year

18,281

28,536


              

18,281

              

28,536


              

              

 

 

 

Deferred and contingent consideration payable is analysed as follows:-

 

 

 

Contingent consideration

2017

£000

2016

£000

 

Due within one year

2,420

3,850

Due over one year

1,133

2,025


              

              


3,553

5,875


              

              

 

(c)        Proforma results

The underlying result for the combined entity for the year as though the acquisition date for all business combinations had been the beginning of the year is as follows:

 


2017

£000

2016

£000

 

Revenue

175,431

154,583

Operating profit

35,454

29,852

 

 

 

 

 

 

 

              

              

9          Copies of the Annual Report and Accounts

Copies of the Annual Report and Accounts will be sent to Shareholders in due course and will be available to members of the public from the Company's registered office located at 5th Floor, Metropolitan House, 3 Darkes Lane, Potters Bar, Herts, EN6 1AG and on the Company's website: www.caretech-uk.com.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR GBBDDXDGBGRR

a d v e r t i s e m e n t