CareTech ends first half in line with forecasts

Specialist social care services provider CareTech Holdings issued its pre-close trading update ahead of its results for the half-year ended 31 March on Thursday, confirming that trading for the period was in line with market expectations.

The AIM-traded firm said performance had been underpinned by the strategic initiatives undertaken over recent years, which delivered a stronger performance compared with the same period last year on all key financial metrics.

CareTech explained that its care pathways continued to be a “key foundation” to delivering positive outcomes for its service users, and to providing value for money for local authorities.

The group's net capacity at the half year was 2,572 places, up marginally from 2,534 places at the start of the period, for a net increase of 38 residential and supported living places.

Of that total, 15 additional beds were in reconfigured services for adults, and in new services there were 10 new beds in adults and 41 new beds in children's.

The new and reconfigured services had a higher contribution than the beds in pre-configuration, and were part of an ongoing strategy to enhance margins.

There were 28 beds withdrawn for reconfiguration in the half year, and there was no change of capacity in fostering.

Compared with 30 September, CareTech said occupancy levels in the mature estate were unchanged at 93%, and the blended occupancy was also unchanged at around 86%.

The group said it expected to continue to achieve further growth by a combination of reconfiguring services and extending facilities in partnership with local authorities and the NHS, and through organic developments and bolt-on acquisitions.

“These initiatives together underpin strong underlying future earnings growth. We also continue to seek and evaluate potential larger acquisitions to complement our organic growth,” the board explained in its statement.

“Care commissioners continue to demand flexible high quality care solutions and favour operators able to deliver across the care pathway.

“Pleasingly, some of 2017's reconfigured services have opened and are already experiencing strong levels of demand from local authorities for referrals, validating our strategy of reconfiguration focusing upon greater acuity service provision.”

Annual fee rate negotiations with local authorities remained at an early stage, CareTech said, and this year were against the backdrop of an increase in the National Living Wage and in the employer's rate into automatic enrolment workplace pension schemes from 1 April.

The board said it anticipated that a more positive outcome would be achieved than in recent years, and that those staff cost increases would be covered by fee increases.

Net debt was £146.7m at 31 March, compared with £147.1m at 30 September 2017.

There was investment in new properties purchased and conversion work on properties acquired earlier which, when refurbished, would open later in the year as residential services, and further continuous investment in IT systems.

“We are pleased that 54 ROC Northwest apprentices and a further nine colleagues working towards Management Level 5 diplomas have started during the half year within the Learning Division,” the board said.

“As an employer, CareTech is a registered apprenticeship training provider in its own right and the board is convinced of the benefits that our apprenticeship programme has had for both our own staff and for the users of our services.”

CareTech said the apprenticeship levy was an “opportunity” to continue to deliver excellence in the care sector and was a “tangible example” of its commitment to training and retaining its workforce.

The group said it was also fully committed to Disability Confident, and had completed the employer scheme accreditation.

In the half year the management team was also further strengthened, and the board said it would continue to bring senior executives into the business to help build a “strong foundation” from which to drive growth and quality.

CareTech was set to announce its interim results in June 2018.

“I am pleased to report another solid performance in the six months ended 31 March, highlighting the growth trajectory that our strategy is delivering,” said executive chairman Farouq Sheikh.

“We continue to deliver our exciting growth strategy through organic initiatives and bolt-on acquisitions whilst continuing to seek larger acquisitions in the highly fragmented sector in which we operate.”