27th Apr 2016 14:24
LONDON (Alliance News) - Cambian Group PLC Wednesday reiterated expectations for a weaker first half of 2016 as it reported a widened loss for 2015, but said it is confident it will resume growth in 2016 as a whole.
The health behavioural health services company said that, whilst operationally 2015 had looked "as if it would be a year of achievement", with continued significant demand for its services, it undertook an expansion plan which was ultimately "overly ambitious", it said.
This included broadening its range of services by acquiring specialist fostering business By the Bridge. However, difficulties in recruiting and training staff, particularly in Children's Services, meant it was not able to open some of its new facilities on time.
The company reported a pretax loss of GBP16.4 million for 2015, widened from a pretax loss of GBP4.2 million in 2014, as a rise in revenue to GBP290.1 million from GBP240.6 million was offset by a step-up in administrative costs, and exceptional costs including a GBP21.7 million fixed asset impairment impairment.
Cambian said it is implementing a number of actions to improve its cost control, forecasting, and the management of its suppliers. It is currently in the process of recruiting of permanent chief financial officer.
The company has opted to suspend its dividend pending its return to growth, it said. It paid a maiden dividend of 1.8 pence for 2014.
Back in March the company had warned that its financial performance had resulted in a breach in its banking covenants, and agreed a temporary waiver with its lending banks to facilitate talks to amend its facilities agreement. The company agreed terms for the amendment of its facilities agreement Tuesday, it said.
Under this amendment, a fee of GBP2.9 million is payable immediately, being 1% of the total GBP290 million facilities, with a flat rate margin of 3.75 percentage points over LIBOR payable on the amounts drawn under the facilities. The facilities are split into two tranches, 'Tranche A' of GBP120 million and 'Tranche B' of GBP170 million.
Additional interest of 10% per year is to be accrued on Tranche A and paid on repayment or expiry of Tranche A, and should this tranche not be repaid by the end of April next year, a further fee of GBP4.0 million is payable. An additional exit fee of up to GBP10 million is payable on repayment of Tranche A, which expires at the end of September next year. Tranche B expires at the end of March 2019.
Cambian expects its finance costs to increase as part of the agreed terms for the amendments of the facilities.
"The results for 2015 were very disappointing, but our remedial actions are taking effect. We continue to experience strong demand for our specialist services, and trading to date is in line with the board's expectations. As previously advised, the result for the first half will be lower than H1 2015. The board is confident that growth will be resumed for the year as a whole," said Chairman Christopher Kemball in a statement.
"Our agenda is clear: continue to implement the remedial action programme; ensure we meet our obligations under the agreed terms for the amendment of our bank facilities; and continue to deliver the highest quality specialist services our customers demand," Kemball added.
Cambian also said Wednesday it has appointed Mike Butterworth as an independent non-executive director.
Butterworth is also a senior independent director at London-listed marketing group St Ives PLC and will join the board of newspaper company Johnston Press PLC as a non-executive director on June 1.
Shares in Cambian were down 11% at 67.25 pence Wednesday afternoon.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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