24th Oct 2013 11:47
LONDON (Alliance News) - Residential care home company CareTech Holdings PLC Thursday said recent acquisitions are expected to save it substantial costs in rental charges, as trading for the full-year remains in line with expectations.
In a trading update for the full-year ended September 30, the company said its trading performance is expected to be underpinned in the current year by the "earnings-enhancing" acquisitions of the freeholds of two property portfolios earlier this year.
In August, the company announced it had bought the freeholds for two property portfolios for GBP38 million, and will pay in cash, partly from new loans, and by issuing new shares. The freeholds were purchased from The Quercus Healthcare Property Partnership and Roborough Properties in Plymouth.
CareTech said the rent saving in 2014 will be up to GBP4.4 million, compared with interest payments associated with the acquisition of the properties of GBP1.6 million.
The company expects the rent savings to increase in the future as the previous rental terms were subject to increases based on inflation.
"The extent to which rent savings will be reflected in the group's profitability is dependent on the extent of reconfiguration work that the group carries out at the properties," the firm said.
At the end of the financial year, the group increased capacity by 106 places to 2,116 places, which comprises 32 additional beds in reconfigured services, 41 beds in supported living and an additional capacity of 33 within fostering.
After a review of fostering and domiciliary care, a total of 123 places were redefined as unavailable. In residential services, 14 places were withdrawn for reconfiguration into new care models and 19 places were removed in supported living.
Net debt stood at GBP168.6 million at the end of the period, compared with GBP133.2 million in March, which CareTech said reflected the earnings enhanced acquisitions of the freehold property portfolios in August
CareTech will announce its preliminary results in December.
The stock was trading at 230.70 pence Thursday afternoon, down 0.80 pence or 0.4%.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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