27 Oct 2016 07:00
For immediate release 27 October 2016
CareTech Holdings PLC
("CareTech" or "the Group")
Full Year Trading Update
CareTech Holdings PLC (AIM:CTH), a pioneering provider of specialist social care services in the UK, is pleased to announce its full year trading update ahead of its results for the year ended 30 September 2016.
The Board confirms that trading for the year is in line with market expectations.
CareTech's care pathways continue to be a key foundation for delivering positive outcomes for our service users. During the year, 74 additional beds in reconfigured services and new services have been brought into capacity. These beds have a higher contribution than the beds pre-reconfiguration and are part of the ongoing strategy to enhance fees and margins. The Group acquired ROC North West in December 2015, which had a children's residential capacity of 41 beds, and Oakleaf (Hartwell) in March 2016, which had an adult residential capacity of 102.
The Group's net capacity at the year-end was 2,319 places (2015: 2,116 places), a net increase in capacity of 203 places. A net 14 places were removed for reconfiguration. These included 20 places in services that have been withdrawn for reconfiguration into new care models, two places that were added in supported living and four added in other services. Once the services comprising 20 places have been reconfigured, we expect them to contribute a higher fee income and profit margin than previously. The addition of places from supported living is due to contract wins in the North West.
Occupancy levels in the mature estate remain strong at 93% (2015: 93%) and the blended occupancy remains approximately 86%.
Annual fee rate negotiations with local authorities have led to a positive outcome this year. The key to improving fee rates remains our work on reconfiguring services that we own and repositioning them for the needs of more complex service users in line with commissioner demand.
In April 2016 the National Living Wage was set at £7.20 an hour for all staff aged 25 and over. This new benchmark is welcomed as we expect it to improve staff retention. The change to the minimum wage affected only a minority of our staff. We are recovering the increase in cost from the appropriate Local Authorities and these negotiations are almost complete.
Following the launch of the CareTech Aspire Programme in 2015 our Learning Division continues to ensure that all of CareTech's care staff receive high quality mandatory and statutory training whilst also being offered the opportunity to complete a Level 2 or Level 3 apprenticeship. We have extended this offer to our CareTech managers who have the opportunity to complete a Level 5 in care management.
We are pleased that 123 of our support staff have completed a level 2/3 apprenticeship and 359 are currently taking the qualification. A further 64 are benefiting from Level 5, Team Leader, Business Admin or Customer Services delivered by EQL, which is part of the Group's Learning Division.
As part of our ongoing commitment to excellence in care, the management team has been further strengthened in the year and we will continue to bring senior executives into the business to help build a strong foundation from which to drive growth and quality.
During the year the Group purchased a number of properties for refurbishment into new services including a Children's service (formerly called Crowroyd), which opened during the year in Yorkshire and has five beds. There was a particular focus on property acquisitions and refurbishments in the second half with work in progress on a total of five properties: three for Spark of Genius in Scotland (one of which has opened in October); one for Children's services in Fife; and one for ROC North West in Lancashire. When opened these five properties will add a further 25 beds.
A further property, near Hereford, was purchased in October for Children's Services, and shortly a new Children's service will open in Dudley next to a service built last year.
Net Debt reduced to £156.9m at the period end (30 September 2015: £158.5m) with the monies raised from the ground rent transaction being spent on the two acquisitions of ROC North West and Oakleaf. The Group continues to work on a number of other opportunities and has a strong pipeline of projects and transactions in progress.
CareTech will announce its preliminary results in early December 2016.
Farouq Sheikh, Executive Chairman, commented:
"I am pleased to report another solid performance over the second half, highlighting the progress we are making in delivering our organic and inorganic growth strategy. The acquisitions made earlier in the year are now fully integrated into the business and we continue to work through a strong pipeline of projects and transactions, seeking opportunities to deploy funds available from the ground rent deal agreed in the first half as well as our existing bank facilities and strong underlying cash flow.
"As recognition of the hard work and dedication of our staff teams I am delighted to note that we have five shortlisted finalists for the prestigious Laing and Buisson 2016 Awards.
"We look forward to providing further updates as we continue with the execution of our exciting growth strategy."
For further information, please contact:
CareTech Holdings PLC 01707 601800
Farouq Sheikh, Executive Chairman
Michael Hill, Group Finance Director
Buchanan (PR Adviser) 020 7466 5000
Mark Court
Sophie Cowles
Stephanie Watson
Panmure Gordon (Nomad and Joint Broker) 020 7886 2500
Freddy Crossley
Peter Steel
Charles Leigh-Pemberton
WH Ireland (Joint Broker) 020 7220 1666
Adrian Hadden
Nick Prowting
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.
About CareTech
CareTech Holdings plc is a leading provider of specialist social care services, supporting adults and children with a wide range of complex needs in more than 250 specialist services around the UK.
Committed to the highest standards of care and care governance, CareTech provides its innovative care pathways through five divisions covering adult learning disabilities, mental health, young people residential services, foster care and learning services.
CareTech, which was founded in 1993, began trading on the AIM market of the London Stock Exchange in October 2005 under the ticker symbol CTH. Its freehold portfolio comprises more than 195 properties.
For further information please visit: www.caretech-uk.com