CareTech Holdings PLC – CTH – Interim Results

CareTech Holdings PLC – CTH – Interim Results

CareTech Holdings PLC (AIM: CTH), a pioneering provider of specialist social care and education services for adults and children in the UK, is pleased to announce its interim results for the six months ended 31 March 2021.

 

Operational highlights

 

·      Continued resilience during COVID-19 pandemic with all sites remaining fully operational

·    Extended Care Pathway through acquisition of a majority holding in diagnostic assistive technology provider Smartbox in October 2020 and formation of a Digital Technology division

·   Portfolio of seven highly specialised facilities for the treatment and care of adults with complex learning disabilities, autism and mental health diagnoses, successfully transferred from The Huntercombe Group. The transfer was structured with no capital outlay and is expected to be immediately earnings accretive

·      13 new Children's Services developments opened with an active pipeline for H2 2021

·      To support and recognise the importance of our front-line staff who have been key to supporting services users during the pandemic, the Group increased the minimum hourly rate above the national minimum wage to £9 per hour

 

Financial results

 

·      Strong underlying performance of the business

·      Revenue growth of 16.5% to £243.0m (2020: £208.5m) driven by organic growth, acquisition of Smartbox, transfer of adult's specialist services sites from The Huntercombe Group and constructive fee negotiations

·      Underlying EBITDA increase of 19.1% to £49.4m (2020: £41.5m)

·      Strong balance sheet with net debt reducing to £263.1m (£268.9m at 30 September 2020) and leverage reduced to 2.8x net debt/ adjusted EBITDA

·      Net cash before non underlying operating activities of £49.2m (2020: £38.2m) and operating cash flow conversion of 99.7%

·      Write back of £11.8m provision following Supreme Court judgement regarding sleep-in shifts in March

·      Increased interim dividend of 4.6p (2020: 4.0p) declared and dividend policy reaffirmed

 

 

H1 2021

H1 2020

% change

Group revenue

£243.0m

£208.5m

+16.5%

Underlying EBITDA(i)

£49.4m

£41.5m

+19.1%

Underlying profit before tax(ii)

£33.6m

£25.5m

+31.6%

Underlying basic earnings per share(ii)

22.33p

18.11p

+23.3%

Statutory profit before tax

£42.3m

£17.7m

+139.7%

Statutory earnings per share

33.37p

9.49p

+251.6%

Operating cash flow before non-underlying items

£49.2m

£38.2m

+28.9%

Net debt (iii)

£263.1m

£287.4m

(8.5)%

Net assets

£393.7m

£352.6m

+11.7%

Interim dividend

4.6p

4.0p

+15.0%

 

 

i.      Underlying EBITDA is operating profit stated before depreciation, share based payments charge and non underlying items (which are explained in note 3).

ii.     Underlying profit before tax and underlying basic earnings per share are stated before non underlying items (explained in note 3).

iii.    Net debt comprises Cash and cash equivalents net of bank loans and borrowings and HP leases previously accounted for under IAS17 excluding Project Teak sale and leaseback.

 

 

 

Commenting on the results, Farouq Sheikh, Executive Chairman of CareTech, said:

 

"The Group's first half performance has been strong with all operational divisions demonstrating considerable resilience during the ongoing pandemic. 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. I am immensely proud of our staff during this period and their efforts and determination in ensuring all our service users receive high quality care in extremely challenging conditions.

"The addition of Smartbox to the portfolio has been a significant milestone and adds a new division enabling digital technology to extend our 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."

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