3 May 2022 07:00
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| 3 May 2022 |
CareTech Holdings PLC
("CareTech" or "the Group")
Trading Update
CareTech Holdings PLC (AIM: CTH), a pioneering provider of specialist social care and education services to adults and children in the UK, today announces a pre-close trading update for the half-year ended 31 March 2022. The Group will report its unaudited half-year results on Thursday 16 June 2022.
Highlights
· Group performance for H1 broadly in-line with board expectations despite COVID-19 and pressures on staffing
· Acquisition of Rehavista GmBH, providing a significant opportunity for Smartbox to expand products and services available in Germany, further strengthening the Group's technology division
· Expansion of care pathways in the United Arab Emirates ("UAE") through the acquisition of Dmetco-Bayti and Wellness, adding specialist health and social care services in home care environments and physical healthcare services in specialist clinic settings
· New purpose-led ESG strategy "CARE4" published outlining our purpose and commitment to sustainability
· Final dividend of 9.5p per share reconfirmed and to be paid to shareholders on 4 May 2022
Farouq Sheikh, Executive Chairman of CareTech, commented:
"I am pleased to report that the Group's performance during the first half of the financial year has been broadly in line with the Board's expectations, despite being set against a challenging staffing backdrop and inflationary pressures. The Group remains in a strong financial position and I remain confident in our outlook.
The Group completed a number of acquisitions during the first half of the year. The acquisition of REHAVISTA has added one of the leading companies globally in the assistive technology industry to the Group and further strengthens Smartbox's global presence.
We were also pleased to complete the acquisition of Dmetco-Bayti and Wellness, which will build on our presence in the UAE through the AS Group, adding further well regarded homecare and clinic offerings to our portfolio.
We warmly welcome the management teams of these recently acquired businesses to CareTech."
Trading and operational performance
The overall performance of the Group is broadly in-line with the Board's expectations, with the effects of labour shortages and the emergence of the highly transmissible Omicron variant in early December 2021 leading to challenges around staff absentees with consequential lower than targeted occupancy and higher agency costs. Accordingly, COVID-19 costs have occurred during the first half which has in part been funded by Government Social Care support through the Infection Control and Testing Fund and Workforce Recruitment and Retention Fund. Whilst COVID-19 self-isolation restrictions have now been lifted in the UK and costs reduced, the Group continues to ensure our services are safe for both our staff and services users and maintaining a COVID-secure environment.
From 1 April 2022, the Group increased the minimum national hourly rate to £9.75 which is above the National Living Wage hourly rate of £9.50. Whilst wage increases along with other operational inflationary pressures are higher than prior years, the Group has had positive discussions with local authorities and expects the majority of these additional operational costs to be covered by fee increases.
As at 31 March 2022, unaudited net debt was £278.3m compared with £258.7m at 30 September 2021. The increase in net debt is due to the deployment of strong operating cash flow of the business by investing in new organic developments and bolt-on acquisitions.
Acquisitions
Following the acquisition of Smartbox in October 2020, the Group announced that it had acquired Rehavista GmBH ('REHAVISTA') in November 2021 which provides a significant opportunity for Smartbox to expand the products and services available in Germany. REHAVISTA is Germany's largest provider of augmentative and alternative communication (AAC) products and services. This continues CareTech's ambition to develop a sector first Digital Pathway of services.
Following CareTech's first international investment in the UAE, the Group announced two further acquisitions as part of its strategy to develop a whole person care pathway of services for people with complex needs and disabilities. Dmetco-Bayti is a well-established home healthcare provider managing the daily health and social care needs of its patients across the UAE and the Wellness Group provides integrated physical health consultations and surgical services. Both acquisitions will expand the care pathway to encompass specialist health and social care services in home care environments, and physical healthcare services in specialist clinic settings.
CareTech's long term goal in the Gulf region is to create a world class integrated solutions provider of care and technology for the mental health, social care, special education, and physical healthcare pathway, offering the widest possible access to people with complex needs and disabilities in their local communities.
Capacity and occupancy
The Group's net capacity as at 31 March 2022 was 4,902 places (September 21: 4,979 places). Adult's Services decreased to 2,083 (September 2021: 2,104) which was attributable to the closure of 23 beds, 31 contract wins and 29 withdrawals. Children's Services was 1,996 (September 2021: 2,000) with the addition of 14 beds opening in the period offset by 18 bed closures/ occupancy changes. Fostering decreased to 823 (September 2021: 875) due to COVID-19 restrictions and a decline in foster parents.
At 31 March 2022, occupancy levels in the mature estate increased to 84% (September 2021: 80%) with blended occupancy increasing to 81% (September 2021: 78%).
Quality ratings and staff retention
As at 31 March 2022, published CQC ratings across the group show 84% of service rated as Good or Outstanding (September 2021: 86%). Ofsted ratings across the group show that 78% of services are rated as Good or Outstanding (September 21: 80%). This compares to the most recently published national rating data of 79% services rated as Good or Outstanding.
We have a clear focus on early intervention and quality improvement plans in all services, with a stronger and dedicated focus to address those services that are not Good or Outstanding. We are confident our comprehensive improvement plans will result in upgrades when the regulators return to a more usual and regular pattern of inspections as COVID-19 restrictions relax.
Staff retention at 31 March increased to 72% (September 21: 71%). Resourcing remains challenging across the sector and CareTech has focused on broader attraction strategies, whilst maintaining a strong focus on 'localised recruitment strategies' which is a proven approach. One such broad strategy has been overseas recruitment of senior care workers, who are qualified experienced nurses.
Board Changes
At the AGM in March 2022, Karl Monaghan, Non-Executive Senior Independent Director stepped down. Adrian Stone joined the Board in January 2022 and will take the on the role of Chair of the Audit Committee.
Group Dividend
The Group reconfirms its final dividend of 9.5p per Ordinary Share which was approved by Shareholders at the Group's AGM on 8 March 2022 and will be paid on 4 May 2022 to shareholders who were on the share register at the close of business on 4 March 2022.
For further information, please contact:
CareTech Holdings PLC 01707 601800
Farouq Sheikh, Executive Chairman
Christopher Dickinson, Group Finance Director
Consilium Strategic Communications 020 3709 5700
Mary-Jane Elliott
Chris Welsh
Angela Gray
Panmure Gordon (Nomad and Joint Broker) 020 7886 2500
Emma Earl
Freddy Crossley
Charles Leigh-Pemberton
Numis (Joint Broker) 020 7260 1000
Jonathan Wilcox
James Black
Duncan Monteith
About CareTech
CareTech Holdings PLC is a leading provider of specialist social care services supporting around 5,000 adults and children with a wide range of complex needs in more than 550 day services the UK employing more than 10,500 staff; and an emerging presence in international markets.
Committed to the highest standards of care and care governance, CareTech's innovative Care Pathway covers Foster care, Children's Services, Adults Services and Technology Solutions.
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.
For further information please visit: www.caretech-uk.com