9th Feb 2016 09:20
LONDON (Alliance News) - Cambian Group PLC on Tuesday warned on its earnings for 2015, saying it now expects earnings before interest, tax, depreciation and amortisation to be lower than previously guided.
Shares in Cambian were trading down 36% at 76.81 pence following the announcement on Tuesday morning.
The provider of health, education and care services for adults and children said adjusted Ebitda for 2015 will be approximately GBP46 million, having indicated in October that it would be no less than GBP49 million.
Cambian said that, since issuing its guidance in October, revenue and wages have been broadly in line with expectations, but that due to weaknesses in its cost management processes, it took longer to identify and manage down other costs.
Revenue for the full year is expected to be around GBP292 million, and the company will not pay a final dividend for the year in light of its results.
Cambian said that in response to the "disappointing" events, it has taken a number of steps to improve performance and bring costs and capital expenditure in line with group revenue.
In order to increase occupancy in the existing estate, it has restructured its central human resources function and created a regional service centre reporting to the operational divisions, to enable greater coordination between staff deployment and the recruitment pipeline. It has also improved induction processes and redesigned training programmes to enhance staff capabilities.
In addition, "considerable steps" have been taken in strengthening its controls to ensure that costs, and in particular non-staff costs, are appropriately managed, taking into account the rate of growth in revenue. PricewaterhouseCoopers has been appointed to conduct a review of its supplier management systems.
Meanwhile, capital expenditure will be reduced to around GBP20 million in 2016, which Cambian considers the minimum necessary to build out its existing facilities and to maintain the quality of its premises.
Cambian added that it has had a "satisfactory" start to 2016, as demand continues to be strong and it is confident it will be able to increase prices in line with the net cost of the National Living Wage.
The group anticipates delivering modest growth in Ebitda in 2016, reflecting a lower first half result, with improving revenue momentum in the second half.
There also will be will be exceptional items relating to the cost-cutting and realignment of the business taken against both 2015 and 2016, estimated to be GBP3.5 million in 2015.
"It is very disappointing to announce a further revision of expectations for the year to 31 December 2015. However, we now have taken the significant remedial actions outlined above and we are already seeing the benefits. We believe that Cambian is fundamentally a good business with an exciting future. To realise its potential, though, we must first refocus the core business before returning to our growth agenda," Chairman Christopher Kemball said in a statement.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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