19th Jun 2006 07:01
CareTech Holdings PLC19 June 2006 For Immediate Release 19 June 2006 CareTech Holdings PLC Maiden Interim Results for the six months ended 31 March 2006 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 2006. The Company joined AIMin October 2005. Highlights • Turnover increased 26% to £13.3m (2005: £10.6m) • EBITDA increased 75% to £1.8m (2005: £1.0m)(1) • Profit before tax increased by 95% to £1.2m (2005: £0.6m) • Adjusted earnings per share up 50% to 2.87p (2005: 1.91p) and earnings per share up 72% to 2.49p (2005: 1.45p) • Strengthening of management team to accommodate growth initiatives • Two major acquisitions completed post half year end • Bed capacity increased from 435 at IPO to 735 • Current overall occupancy levels at 91%, including 94% in core operations Notes: 1. Being the operating profit before interest, taxation, depreciation, amortisation and exceptional items, being a recognised measure of profitability generating operating cashflows. Farouq Sheikh, Executive Chairman, said: "I am pleased with the progress that CareTech has made since its IPO in October2005. The Company has made significant progress with its organic growthinitiatives and following the completion of the two major earnings enhancingacquisitions post half year end is well positioned to deliver incrementalearnings growth." For further information please call: CareTech Holdings PLC 01707 652053Farouq Sheikh, Executive ChairmanDavid Spink, Finance Director Buchanan Communications 020 7466 5000Diane StewartTim AndersonAmy Rajendran Brewin Dolphin Securities 0845 270 8600Matt DavisAndrew Emmott CareTech Holdings PLC Chairman's Statement Introduction I am pleased to present my interim report for the six months ended 31 March2006. During this period we have been successful in adding additional capacitythrough the development of existing homes and through adding single site andother operations to the CareTech portfolio. Since the half year end, we have completed two major strategic acquisitions,which has seen our bed capacity increase from 423 at 30 September 2005 totoday's level of 735. Results The Company is reporting continued growth in revenues which have increased by26% to £13.3m, reflecting the impact of the 2005 developments which have come onstream in the period. EBITDA has risen significantly during the period to £1.8mup some 75% on the same period in 2005. Operating margins before amortisation ofgoodwill have risen from 7.9% in the first half of 2005 to 11.8%. Profit beforetaxation excluding goodwill amortisation increased by 78% to £1.3m (2005:£0.8m). The strong conversion of higher revenues to profitability reflects theproportionally lower cost required both operationally and in the Company'scentral overhead and management infrastructure, to maintain scalability relativeto capacity growth. Occupancy levels in the mature estate were stable in the period and at the halfyear end were at a satisfactory 94%. Overall occupancy levels including organicand other developments at the half year end stood at 90%. Basic earnings per share have grown by 68% on a diluted and 72% on a non-dilutedbasis. The adjusted EPS has grown by 47% both on a diluted and 50% on anon-diluted basis. In line with the policy set out at flotation, no dividend is proposed at thisstage of the Company's development. Cash Flow Net operating cash inflow in the period rose to £0.8m, representing an increaseof 68% compared with last year. Net debt in the period has been significantlyaffected by the flotation in October 2005, which contributed net funds of £9.5mand allowed the repayment of £6.8m of debt. At the half year, net debt stood at£5.6m compared with £13.7m at the 2005 year end. Acquisitions and property purchases since the period end have resulted in a cashoutflow of £30.1m which has been financed from the increased debt facilities of£50m. Acquisitions and Developments The Company has worked hard during the period to take advantage of acquisitionopportunities available in the fragmented market place in which we operate. Aparticular focus of management time in this regard has been to identify andcomplete acquisitions geographically contiguous to our Birmingham acquisitionwhich was completed in August 2005. I am therefore particularly pleased thatsince the half year end the Company has been successful in completing twoacquisitions in the Midlands, namely Delam Care Limited completed in May for anet cash consideration of £8.6m and Lonsdale Midlands Limited also completed inMay for a net cash consideration of £15m. The Directors believe that theseacquisitions will be earnings enhancing in the current financial year. Delam Care Limited provides services for adults and children with learningdisability in the Staffordshire area. The acquisition of services for childrenwith learning disabilities is an important development as this provides avaluable feeder for adult services. Lonsdale Midlands Limited is a valuable strategic acquisition offering thebenefit of good quality residential care services, established supported livingschemes and a strong local reputation. The retention of certain elements of itscentral office and infrastructure will enable CareTech to co-ordinate itsMidlands operations from a newly-created regional centre. CareTech Holdings PLC Chairman's Statement - continued Following the completion of the two acquisitions our capacity in the Midlandsarea stands at 265 beds. The Directors believe that our increased scale will notonly contribute towards revenues but allow CareTech to deliver enhanced servicesto our clients and referring local authorities in the area. Whilst the above acquisitions have provided a significant base in the Midlands,it is also pleasing to note that the Company has continued to grow organicallythrough property purchases and by expanding existing services. Otherdevelopments in the year to date are the purchase of 12 properties, representing79 beds, of which 8 properties are in Essex and the remaining 4 in London andthe Home Counties, where CareTech already has a strong presence. CareTech's current bed capacity is summarised below: Capacity at 1 Other Delam Care Lonsdale Care Current October 2005 developments Capacity 423 79 74 159 735 During the period CareTech has continued its policy of broadening andstrengthening its relationships with local authorities. The Company is inregular dialogue with over 103 local and health authorities, many of which haveplaced clients. The Directors believe that CareTech's policy of delivering highquality care solutions continues to provide it with competitive advantage in itsdealings with referring local authorities. Overall capacity now stands at 735 beds compared with 423 at the year end and435 at flotation. Occupancy levels are currently around 91%. Investment in Management and Infrastructure The Board recognises the need to invest in the Company's infrastructure, systemsand personnel to ensure that CareTech manages and builds upon the excitinggrowth achieved to date. The Company has made two key appointments in thisregard; a Regional Operations Director will assume responsibility for theCompany's operations and business development in the South East. A GroupFinancial Controller will add necessary depth to our finance team and will becharged with playing a key role in the financial integration of acquisitions. The Board's strategic plans anticipate additional selective infrastructureinvestments as dictated by further organic growth and acquisition initiatives Market The market for specialist residential care services for adults with learningdisabilities remains strong. The Directors believe that the demand fromreferring local authorities for the high quality care solutions provided byCareTech and the small number of other larger operators in the sectorsignificantly outstrips supply. Industry reports anticipate that this demandsupply imbalance will continue for the foreseeable future. The higher demand for quality care services and increasing regulatory burden hasmade it more challenging for smaller and mid size specialist care homebusinesses to operate successfully. This has resulted in significantconsolidation opportunities for CareTech as the owners of such businesses seekto exit the market or benefit from the economies of scale that will arise frombeing part of a larger group. The Directors expect this trend to continue in thesecond half and in future years and will continue to actively evaluateacquisition opportunities which can deliver enhanced value for shareholders. Outlook The business is developing strongly and according to plan. The results for thefull year to 30 September 2006 are expected as in prior years to be weightedtowards the second half. The second half weighting arises from the impact ofannual fee increases effective from April in each year ahead of annual wagereviews which are completed largely in October of each year, together with theimpact of the fill up of capacity arising from growth initiatives completed inthe first half. The acquisitions noted above, will also have a significanteffect on the results for the second half. The Board's principal focus for the remainder of the year will be to integratethese recent acquisitions, whilst continuing to develop our core portfolio.Looking ahead, the Company will continue to actively evaluate further selectiveacquisition opportunities. Following the completion of the acquisitions of Delamand Lonsdale the Directors confidently believe that the Company is wellpositioned to deliver strong earnings growth in the second half of the year andin future periods. Farouq Sheikh Executive Chairman 19 June 2006 CareTech Holdings PLC Unaudited Group Profit and Loss Account For the six months ended 31 March 2006 -------------------------- ------ ---------- ---------- ---------- Notes 6 months ended 6 months ended Year ended 31 March 2006 31 March 2005 30 Sept 2005 unaudited unaudited audited £000 £000 £000-------------------------- ------ ---------- ---------- ---------- Turnover 13,348 10,585 22,475Cost of sales (10,856) (8,992) (18,923)-------------------------- ------ ---------- ---------- ---------- Gross profit 2,492 1,593 3,552 Administrative expenses (1,077) (892) (1,902) -------------------------- ------ ---------- ---------- ----------Operating profit 1,415 701 1,650-------------------------- ------ ---------- ---------- ----------EBITDA: Operating profitbefore interest, taxationdepreciation,amortisation 1,792 1,036 2,438 Depreciation (242) (200) (517) Amortisation (135) (135) (271)-------------------------- ------ ---------- ---------- ---------- 1,415 701 1,650-------------------------- ------ ---------- ---------- ---------- Exceptional item 2 - - 875 Interest receivable andsimilar income 90 25 39 Interest payable andsimilar charges (314) (105) (397)-------------------------- ------ ---------- ---------- ---------- Profit on ordinaryactivities beforetaxation 1,191 621 2,167 Taxation on profit onordinary activities 3 (298) (199) (366) -------------------------- ------ ---------- ---------- ----------Profit on ordinaryactivities aftertaxation 893 422 1,801-------------------------- ------ ---------- ---------- ---------- Earnings per share Basic 4 2.49p 1.45p 6.17p Diluted 4 2.44p 1.45p 6.17p Adjusted basic 4 2.87p 1.91p 4.10p Adjusted diluted 4 2.81p 1.91p 4.10p There were no recognised gains in the period other than those shown in theprofit and loss account. There is no difference between the results stated above and those stated on ahistoric cost basis. CareTech Holdings PLC Unaudited Group Balance Sheet At 31 March 2006 31 March 31 March 30 September 2006 2005 2005 unaudited unaudited audited £000 £000 £000----------------------- ----------- ----------- ------------ Fixed AssetsIntangible assets 4,236 4,507 4,371Tangible assets 17,359 9,770 15,761----------------------- ----------- ----------- ------------ 21,595 14,277 20,132----------------------- ----------- ----------- ------------Current AssetsStock 22 22 22Debtors 2,013 2,104 2,672Cash at bank and in hand 3,271 112 1,827----------------------- ----------- ----------- ------------ 5,306 2,238 4,521Creditors: amounts fallingdue within one year (3,245) (4,301) (11,825)----------------------- ----------- ----------- ------------Net current assets /(liabilities) 2,061 (2,063) (7,304)----------------------- ----------- ----------- ------------Total assets lesscurrent liabilities 23,656 12,214 12,828----------------------- ----------- ----------- ------------Creditors: amounts fallingdue after more than oneyear (9,083) (3,482) (8,663)----------------------- ----------- ----------- ------------ 14,573 8,732 4,165----------------------- ----------- ----------- ------------Capital and ReservesCalled up share capital 181 1 1Share premium account 9,569 249 249Profit and loss account 4,823 8,482 3,915----------------------- ----------- ----------- ------------ 14,573 8,732 4,165----------------------- ----------- ----------- ------------Shareholders' funds Equity 14,573 8,732 4,165----------------------- ----------- ----------- ------------ CareTech Holdings PLC Unaudited Group Cash Flow Statement For the six months ended 31 March 2006 ------------------------ ----------- ----------- ------------ 6 months ended 6 months ended Year ended 31 March 2006 31 March 2005 30 September 2005 unaudited unaudited audited £000 £000 £000------------------------ ----------- ----------- ------------ Net cash inflow fromoperating activities 759 453 2,064Returns on investments andservicing of finance (225) (112) (380)Capital expenditure andfinancial investment (1,747) (2,264) (7,542)------------------------ ----------- ----------- ------------Net cash outflow beforefinancing (1,213) (1,923) (5,858) Financing 2,657 762 6,413------------------------ ----------- ----------- ------------Increase / (decrease) incash 1,444 (1,161) 555------------------------ ----------- ----------- ------------ ------------------------ ---------- ------------ ------------ 6 months ended 6 months ended Year ended 31 March 31 March 30 September 2006 2005 2005 unaudited unaudited audited £000 £000 £000------------------------ ---------- ------------ ------------ Reconciliation of net cash flow tomovement in net debt Change in cash in the period 1,444 (1,161) 555Cash flow from decrease indebt and lease financing (2,657) (762) (6,413)New shares issued (net ofissue costs 9,526 - -Redemption of share capital - - (6,445)New hire purchaseinceptions (212) (135) (235)------------------------ ---------- ------------ ------------Change in net debtresulting from cash flows 8,101 (2,058) (12,538) Net debt at start offinancial period (13,746) (1,208) (1,208)------------------------ ---------- ------------ ------------Net debt at end offinancial period (5,645) (3,266) (13,746)------------------------ ---------- ------------ ------------ Net debt is disclosed in the balance sheets as: ------------------------ ---------- ------------ ------------ 6 months ended 6 months ended Year ended 31 March 31 March 30 September 2006 2005 2005 unaudited unaudited audited £000 £000 £000------------------------ ---------- ------------ ------------ Cash at bank and in hand 3,271 112 1,827Creditors due within oneyear (136) (95) (6,910)Creditors due after morethan one year (8,780) (3,283) (8,663)------------------------ ---------- ------------ ------------Net debt (5,645) (3,266) (13,746)------------------------ ---------- ------------ ------------ CareTech Holdings PLC Notes to the Financial Statements 1. Accounting policies The interim financial information does not constitute statutory accounts for thepurpose of section 240 of the Companies Act 1985. The figures for the year ended30 September 2005 have been extracted from the group accounts for that year.Those financial statements have been delivered to the Registrar of Companies andinclude 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 2005. 2. Exceptional item---------------------- ----------- ----------- ----------- 6 months ended 6 months ended Year ended 31 March 31 March 30 September 2006 2005 2005 unaudited unaudited audited £000 £000 £000---------------------- ----------- ----------- ----------- Profit on sale of fixedassets - - 875---------------------- ----------- ----------- ----------- 3. Taxation on profit on ordinary activities ------------------------ ----------- ----------- ----------- 6 months ended 6 months ended Year ended 31 March 31 March 30 September 2006 2005 2005 unaudited unaudited audited £000 £000 £000------------------------ ----------- ----------- ----------- Corporation tax 303 199 366------------------------ ----------- ----------- ----------- The tax charge for the period to 31 March 2006 has been calculated at aneffective rate of 25%. CareTech Holdings PLC Notes to the Financial Statements - Continued 4. Earnings per share The calculation of the basic earnings per share is based on the earningsattributable to ordinary shareholders, divided by the weighted average number ofshares in issue during the period. FRS 14 requires presentation of diluted EPS to reflect all outstanding shareoptions where their future exercise would decrease net profit per share. Reconciliations of the earnings and weighted average number of shares used inthe calculation are set out below. ---------------------- ---------- ----------- ----------- 6 months ended 6 months ended Year ended 31 March 31 March 30 September 2006 2005 2005 unaudited unaudited audited £000 £000 £000---------------------- ---------- ----------- -----------Earnings for the year 893 422 1,801 Goodwill amortisation 135 135 271Exceptional item - - (875)---------------------- ---------- ----------- -----------Adjusted earnings for theyear 1,028 557 1,197---------------------- ---------- ----------- ----------- Weighted average number ofshares in issue 35,805,569 29,169,924 29,169,924Diluted weighted averagenumber of shares 36,541,195 29,169,924 29,169,924 Earnings per share - basic 2.49p 1.45p 6.17p - diluted 2.44p 1.45p 6.17p Adjusted earnings pershare - basic 2.87p 1.91p 4.10p - diluted 2.81p 1.91p 4.10p Earnings per share have been calculated as required by FRS14 to take intoaccount the effect of changes in the capital structure immediately prior toflotation. Adjusted earnings for the year represent earnings for the year adjusted forgoodwill amortisation, exceptional items and the taxation thereon. CareTech Holdings PLC Notes to the Financial Statements - Continued 5. Post balance sheet events On 7 April 2006, CareTech Community Services Limited acquired certain freeholdproperties together with the entire issued share capital of Care SupportServices Limited for a cash consideration of £2.9m. On 2 May 2006, the Company increased its existing facility with the Royal Bankof Scotland plc to a £50m Revolving Credit Facilities Agreement. On 2 May 2006, CareTech Community Services Limited acquired certain freeholdproperties together with the entire issued share capital of Delam Care Limitedfor a cash consideration of £8.6m. On 17 May 2006, CareTech Community Services Limited acquired certain freeholdassets, together with the entire issued share capital of Sunnyside Care HomesLimited for a cash consideration of £3.6m. On 26 May 2006, CareTech Community Services Limited acquired the entire issuedshare capital of Lonsdale Midlands Limited for £15m. 6. Distribution to shareholders This interim report is being sent to all shareholders and will be available tothe public from the Company's registered office, Leighton House, 33-37 DarkesLane, Potters Bar, Hertfordshire EN6 1BB. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
CTH.L