5th Jun 2007 07:01
CareTech Holdings PLC05 June 2007 For Immediate Release 5 June 2007 *** An Analyst Briefing will be held at the offices of Buchanan Communications45 Moorfields, London, EC2Y 9AE at 9:30am *** CareTech Holdings PLC Interim Results for the six months ended 31 March 2007 CareTech Holdings PLC (AIM: CTH) ("CareTech" or "the Company"), a leading UKprovider of learning disability care services, is pleased to announce itsInterim Results for the six months ended 31 March 2007. Highlights • Turnover increased 86% to £24.8m (2006: £13.3m) • EBITDA increased 158% to £4.6m (2006: £1.8m)(1) • Operating profit increased 158% to £3.7m (2006: £1.4m). • Profit before tax increased by 101% to £2.7m (2006: £1.3m)(2) • Adjusted basic earnings per share up 108% to 5.98p (2006: 2.87p) and basic earnings per share up 80% to 4.47p (2006: 2.49p). • Implementation of regionalised structure to accelerate growth initiatives • The acquisition of Counticare was completed. • Bed capacity increased from 739 to 884 with mature occupancy maintained at 94%. • Interim dividend of 1p per share introduced. Notes: 1. Being the operating profit before interest, taxation, depreciation,amortisation and exceptional items, being a recognised measure of profitabilitygenerating operating cashflows. 2. Being the profit before tax, amortisation and exceptional items. Farouq Sheikh, Executive Chairman, said: "The performance in the first half is again very strong. The Group isdemonstrating continuing growth in client capacity ahead of market expectations,and the acquisitions since flotation have integrated successfully and areperforming well. The Group remains well placed to deliver growth in futureperiods". For further information please call: CareTech Holdings PLC 01707 652053 Farouq Sheikh, Executive Chairman David Spink, Finance Director Buchanan Communications 020 7466 5000 Diane Stewart Tim Anderson Brewin Dolphin Securities 0845 270 8600 Matt Davis Andrew Emmott CareTech Holdings PLC Chairman's Statement Introduction I am pleased to present my interim report for the six months ended 31 March2007. This period has seen further good growth for the Group from bothcontinuing organic development and from the acquisition of Counticare, which wasannounced to shareholders on 16 November 2006. Results The Company is reporting a strong uplift in revenues and earnings reflecting theimpact of our growth in 2006, together with that for the current year. Revenues increased by 86% to £24.8m of which £2.3m is attributable toCounticare. EBITDA has also risen significantly in the period to £4.6m, up some158% on the same period in 2006. Profit before taxation, excluding goodwill amortisation and exceptional costsincreased by 101% to £2.7m (2006: £1.3m). The acquisition of Counticare has lead to certain non-recurrent integrationcosts of £100,000, together with £100,000 in respect of non-recurrent costs ofintroducing the regionalised management structure. Basic earnings per share have grown by 80% and adjusted basic earnings per sharehave grown by 108%. Net operating cash inflow in the period increased to £4.2m, but significantexpenditure on acquisitions and organic developments resulted in a neutral cashmovement in the period. Cash balances at 31 March were £1.5m (2006: £3.3m) withnet debt at £55.1m (2006: £5.6m) Acquisitions and Developments The Group continues to evaluate acquisition opportunities in the fragmentedmarket in which we operate. The acquisition of Counticare was completed inNovember for an initial cash consideration of £14.7m, comprising 12 freeholdservices for adults with learning disability in the Kent area. This hassuccessfully integrated with our existing services in Kent and has been earningsenhancing from the outset. During March a further service has been added to theportfolio in this region as part of our organic development. Organic development has also been strong with a further 44 beds added during theperiod, representing the creation of 5 new services and the expansion of 4existing services. Of the 44 resident places developed, 31 are situated in theMidlands where we increased our presence to a resident capacity of 295. The first half has therefore continued the strategy of acquiring and developingfreehold properties and the Group has now grown to having a valuable freeholdportfolio in its balance sheet. Client Capacity and Occupation Levels Total client capacity has increased from 739 places at September 2006 to 884places at 31 March 2007, representing an increase of 20%. Since our flotation inOctober 2005, resident capacity has increased by 109%. Occupation levels inmature services remain at 94%. In addition, the Group has been awarded a seven year contract to providesupported living services to 24 clients in the Solihull area, with effect fromApril 2007. This will contribute positively to earnings in the second half andbeyond. CareTech Holdings PLC Chairman's Statement - continued Investment in Management and Infrastructure We announced in 2006, the introduction of a regional operational managementstructure which will enable the Group to achieve growth and to integrate newservices more effectively. I am pleased to report that the 3 regional teams aresubstantially complete and beginning to deliver against this plan. Throughadoption of this structure, we believe we are better placed to achieve our shortto medium term objectives of reaching a client capacity of 1,500 places. Market The market for our services remains strong with demand for high quality caresolutions from referring local authorities continuing to remain robust. I reported in December that the Group had broadened its range of servicesthrough the introduction of supported living and children's services. I ampleased to confirm that further progress has been made in this regard. In thecurrent financial year supported living services have been expanded by a further5 clients, bringing the total client number receiving this type of service to82. Our 2006 acquisition of Delam Care Limited introduced the provision ofchildren's services to the Group. I am pleased to report the development of twofurther services in the Midlands as we begin to leverage the expertise acquiredwith Delam. Significant consolidation opportunities continue to exist and the Directors willcontinue to actively evaluate acquisition opportunities which can deliverenhanced value for shareholders. Dividend At the time of our flotation the Board undertook to keep its dividend policyunder review. Following the substantial progress made I am pleased to confirmthat the Board has introduced the payment of an interim dividend of 1 pence pershare for the current year, payable on 27 July 2007. Board change Following five successful years with the Group, Graham Mattinson has decided toretire and step down from his position as Operations Director with effect fromtoday. Graham has contributed significantly to the Group's progress and hasrecently concluded the restructuring of the Group's operational management intoa devolved regional structure. The Board wishes Graham well in his retirementand extends its thanks to him for his service and contribution to the Group'ssuccess. Outlook Following a good start to the year, the Board remains confident about prospectsfor the future. Organic growth continues to be achieved ahead of our initialplans and the increased capacity remains the foundation for future uplifts inrevenues and earnings. The creation of a regional management structure is a keyachievement as this will facilitate acceleration of the capacity growth; ourrecent tender success demonstrates an improved ability to capitalise on marketopportunities. Opportunities for growth remain very good and the Group will continue toactively evaluate further selective acquisition opportunities. Following theorganic development achieved in the first six months and the acquisition ofCounticare, the Directors confidently believe that the Group is well positionedto deliver earnings growth in the second half of the year and beyond. Farouq Sheikh Executive Chairman 5 June 2007 CareTech Holdings PLC Unaudited Group Profit and Loss Account For the six months ended 31 March 2007 -------------------------- ------ ---------- ---------- ---------- Notes 6 months ended 6 months ended Year ended 31 March 2007 31 March 2006 30 Sept 2006 unaudited unaudited audited £000 £000 £000 -------------------------- ------ ---------- ---------- ----------Turnover - ongoing operations 22,519 13,348 28,622 - acquisitions 2,330 - 4,828 ---- ------------------------ ------ ---------- ---------- ---------- 24,849 13,348 33,450 Cost of sales (18,788) (10,856) (26,394)-------------------------- ---------- ---------- ---------- ------ -------------------------- ---------- ---------- ---------- Gross profit 6,061 2,492 7,056 Administrative expenses (2,404) (1,077) (2,623) -------------------------- ------ ---------- ---------- ----------Operating profit - ongoing operations 3,002 1,415 3,590 - acquisitions 655 - 843 ---- ------------------------ ------ ---------- ---------- ---------- 3,657 1,415 4,433 -------------------------- ------ ---------- ---------- ----------EBITDA: Operating profit before interest,taxationdepreciation,amortisation 4,627 1,792 5,502 Depreciation (423) (242) (670) Amortisation (347) (135) (399) Exceptional item 2 (200) - - -------------------------- ------ ---------- ---------- ---------- 3,657 1,415 4,433 -------------------------- ------ ---------- ---------- ---------- Interest receivable andsimilar income 87 90 122 Interest payable andsimilar charges (1,629) (314) (1,210) -------------------------- ------ ---------- ---------- ---------- Profit on ordinaryactivities beforetaxation 2,115 1,191 3,345 Taxation on profit onordinary activities 3 (494) (298) (792) -------------------------- ------ ---------- ---------- ----------Profit for the financialperiod 1,621 893 2,553-------------------------- ------ ---------- ---------- ----------Earnings per share Basic 5 4.47p 2.49p 7.07p Diluted 5 4.43p 2.44p 7.03pAdjusted earnings per share Basic 5 5.98p 2.87p 8.17p Diluted 5 5.92p 2.81p 8.13p There were no other recognised gains or losses other than the results as statedabove for the current and preceding periods. All activities relate to continuing operations. CareTech Holdings PLC Unaudited Group Balance Sheets At 31 March 2007 31 March 31 March 30 September 2007 2006 2006 unaudited unaudited audited £000 £000 £000 -------------------------- -------- ----------- ------------ Fixed AssetsIntangible assets 7,961 4,236 7,408Tangible assets 70,210 17,359 48,401 -------------------------- -------- ----------- ------------ 78,171 21,595 55,809 -------------------------- -------- ----------- ------------Current AssetsDebtors 2,609 2,035 2,766Cash at bank and in hand 1,470 3,271 1,478 -------------------------- -------- ----------- ------------ 4,079 5,306 4,244 Creditors: amounts falling due withinone year (7,549) (3,245) (6,851) -------------------------- -------- ----------- ------------Net current (liabilities) / assets (3,470) 2,061 (2,607) -------------------------- -------- ----------- ------------Total assets less current liabilities 74,701 23,656 53,202 -------------------------- -------- ----------- ------------Creditors: amounts falling due after morethan one year (56,862) (9,083) (36,984) -------------------------- -------- ----------- ------------Net Assets 17,839 14,573 16,218-------------------------- -------- ----------- ------------Capital and reservesCalled up share capital 181 181 181Share premium account 9,569 9,569 9,569Profit and loss account 8,089 4,823 6,468 -------------------------- -------- ----------- ------------Equity shareholders' funds 17,839 14,573 16,218-------------------------- -------- ----------- ------------ CareTech Holdings PLC Unaudited Group Cash Flow Statement For the six months ended 31 March 2007 ------------------------ ----------- ----------- ------------ 6 months ended 6 months ended Year ended 31 March 2007 31 March 2006 30 September 2006 unaudited unaudited audited £000 £000 £000 ------------------------ ----------- ----------- ------------ Net cash inflow fromoperating activities 4,166 759 4,547Returns on investments andservicing of finance (1,576) (225) (1,082)Capital expenditure andfinancial investment (7,105) (1,747) (18,045)Acquisitions net of cashacquired (15,078) - (15,572)Taxation paid (63) - - ------------------------ ----------- ----------- ------------Net cash outflow beforefinancing (19,656) (1,213) (30,152) Financing 19,648 2,657 29,803 ------------------------ ----------- ----------- ------------(Decrease) / increase incash (8) 1,444 (349) ------------------------ ----------- ----------- ------------ ------------------------ ----------- ----------- ------------ 6 months ended 6 months ended Year ended 31 March 2007 31 March 2006 30 September 2006 unaudited unaudited audited £000 £000 £000 ------------------------ ----------- ----------- ------------ Reconciliation of net cash flow tomovement in net debt Change in cash in theperiod (8) 1,444 (349)Cash flow from(increase)/decrease indebt financing (20,087) 6,869 (20,538)New hire purchaseinceptions (48) (212) (369) ------------------------ ----------- ----------- ------------Change in net debtresulting from cash flows (20,143) 8,101 (21,256) Net debt at start offinancial period (35,002) (13,746) (13,746) ------------------------ ----------- ----------- ------------Net debt at end offinancial period (55,145) (5,645) (35,002) ------------------------ ----------- ----------- ------------ Net debt is disclosed in the balance sheets as: ------------------------ ----------- ----------- ------------ 6 months ended 6 months ended Year ended 31 March 2007 31 March 2006 30 September 2006 unaudited unaudited audited £000 £000 £000 ------------------------ ----------- ----------- ------------ Cash at bank and in hand 1,470 3,271 1,478Debt due within one year - (136) -Debt due after more thanone year (55,829) (8,116) (35,659)Finance leases and hirepurchase contracts (786) (664) (821) ------------------------ ----------- ----------- ------------Net debt (55,145) (5,645) (35,002)------------------------ ----------- ----------- ------------ CareTech Holdings PLC Notes to the Financial Statements 1. Accounting policies The interim financial information for each of the six month periods ended 31March 2007 and 31 March 2006 is unaudited and does not constitute statutoryaccounts for the purpose of section 240 of the Companies Act 1985. The figuresfor the year ended 30 September 2006 have been extracted from the group accountsfor that year. Those financial statements have been delivered to the Registrarof Companies and include an auditors' report which was unqualified The interim financial information has been prepared using the same accountingpolicies and estimation techniques as set out in the group accounts for the yearended 30 September 2006, with the exception of FRS 20 (Share Based Payments)which has been applied for the first time. There is no material effect to prioryear figures. 2. Exceptional item ------------------------ ----------- ----------- ----------- 6 months ended 6 months ended Year ended --- 31 March 2007 31 March 2006 30 September --- 2006 unaudited unaudited audited --- £000 £000 £000 ------------------------ ----------- ----------- ----------- Acquisition integrationcosts 100 - -Regionalisation costs 100 - - ------------------------ ----------- ----------- ----------- 200 - - ----------- ----------- ----------- ------------------------ Exceptional items for the period ended 31 March 2007 represent the costassociated with restructuring, reorganising and integrating the Group followingthe Counticare acquisition together with the non-recurrent cost attributable tothe creation of the regionalised management structure. The tax effect isestimated to be £46,000 3. Taxation on profit on ordinary activities The tax charge for the period to 31 March 2007 is based on the estimated rate ofcorporation tax that is likely to be effective for the full year to 30 September2007. 4. Dividends The Directors have approved an interim dividend of 1 pence per ordinary share,totalling approximately £362,000 which will be paid on 27 July 2007 toshareholders on the register at 6 July 2007. No dividends were paid in respectof the period to 31 March 2006. CareTech Holdings PLC Notes to the Financial Statements - Continued 5. Earnings per share --- ---------------------- ---------- ----------- ----------- 6 months ended 6 months ended Year ended 31 March 2007 31 March 2006 30 September 2006 unaudited unaudited audited £000 £000 £000 --- ---------------------- ---------- ----------- ----------- --- --- --- Earnings for the period 1,621 893 2,553 Goodwill amortisation 347 135 399 Exceptional item 200 - - --- ---------------------- ---------- ----------- ----------- Adjusted earnings for the 2,168 1,028 2,952 --- period ---------- ----------- ----------- ---------------------- Weighted number of shares in 36,232,424 35,805,569 36,116,358 issue for basic earnings per share Weighted number of shares for 36,602,106 36,541,195 36,294,625 diluted earnings per share Adjusted earnings for the period represent earnings for the period adjusted forgoodwill amortisation, exceptional items and the taxation thereon.Diluted earnings per share is the basic earnings per share adjusted for thedilutive effect of the conversion into fully paid shares of the weighted averagenumber of share options outstanding during the period. Earnings per share (pence per share) - basic 4.47p 2.49p 7.07p - diluted 4.43p 2.44p 7.03p Adjusted earnings per share - basic 5.98p 2.87p 8.17p - diluted 5.92p 2.81p 8.13p CareTech Holdings PLC Notes to the Financial Statements - Continued 6. Counticare acquisition On 16 November 2006, CareTech Estates Limited acquired certain freeholdproperties from Counticare Holdings Limited and CareTech Community Servicesacquired the entire share capital of Counticare Limited and Hazeldene UK Limitedfor a total cash consideration of £14,670,000 plus costs. The provisional fair values attributed by the directors to the net assets are asfollows: Book Freeholds Fair value Fair value acquired adjustments value £000 £000 £000 £000 Tangible fixed assets 92 12,862 2,320 15,274 Debtors 479 479 Cash 180 180 Creditors (1,413) (150) (1,563) --------- --------- (662) 14,370 --------- --------- Consideration paid - cash 14,670 Costs of acquisition 300 ---------Total cost of acquisition 14,970 --------- Goodwill arising onacquisition 600 --------- 7. Distribution to shareholders This interim report is being sent to all shareholders and will be available tothe public on the Group's website (www.caretech-uk.com) and from the Company'sregistered office, Leighton House, 33-37 Darkes Lane, Potters Bar, HertfordshireEN6 1BB. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
CTH.L