CareTech turns in much-improved first-half performance

(Sharecast News) - Specialist social care and education services company CareTech reported a "strong underlying performance" in its interim results on Thursday, with revenue growing 16.5% to £243m year-on-year.
The AIM-traded firm said that was driven by organic growth, the acquisition of Smartbox, the transfer of adult specialist services sites from the Huntercombe Group, and constructive fee negotiations.

Underlying EBITDA was up 19.1% for the six months ended 31 March to £49.4m.

The board described the balance sheet as "strong", with net debt reducing to £263.1m, and leverage reduced to 2.8x net debt-to-adjusted EBITDA.

Net cash before non underlying operating activities totalled £49.2m at period end, up from £38.2m a year earlier, while operating cash flow conversion stood at 99.7%.

CareTech reported the write-back of an £11.8m provision following the Supreme Court judgement regarding sleep-in shifts in March.

It increased its interim dividend to 4.6p, from 4p a year earlier, as the board reaffirmed its dividend policy.

"The group's first half performance has been strong with all operational divisions demonstrating considerable resilience during the ongoing pandemic," said executive chairman Farouq Sheikh.

"I am pleased to report that our trading performance is significantly ahead compared with the same period last year.

"Covid-19 has highlighted the importance of having community based, high quality social care facilities to relieve the pressures on the NHS."

Sheikh said the addition of Smartbox to the portfolio was a "significant milestone", adding a new division enabling digital technology to extend the company's 'care pathway'.

"Our belief is that digital adoption will play a significant role in enhancing the independence of our service users and our '100 Voices' programme has reaffirmed our strategy.

"We remain confident of our outlook, delivering further earnings and dividend growth and in the long-term prospects of the business."

At 0918 BST, shares in CareTech Holdings were up 0.41% at 612.52p.