TIDMCTH
RNS Number : 8238C
CareTech Holdings PLC
20 June 2019
For immediate release 20 June 2019
CareTech Holdings PLC
("CareTech" or the "the Group")
Interim Results for the six months ended 31 March 2019
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 2019.
Highlights
-- Completion of transformational acquisition of Cambian Group
plc ("Cambian") in October 2018 for GBP278.5m (net of cash
acquired)
-- Unconditional regulatory clearance for the integration of
Cambian from the Competition and Markets Authority ("CMA") in
February 2019
-- Integration of Cambian well underway and synergies on track to be delivered to plan
-- Cambian EBITDA margin considerably improved over last published results
-- Independent property portfolio valuation of the Enlarged
Group of GBP774m at the date of acquisition
-- Banking facilities renewed until 2022/2023
-- Completion of ground rent transaction raising GBP31m net proceeds in January 2019
-- CQC and OFSTED ratings continue to be ahead of sector averages
-- Staff retention initiatives proving successful with retention rates ahead of sector average
Financial Highlights
H1 2019 H1 2018 Change
Group revenue GBP192.5m GBP87.6m 120%
---------- ---------- -------
CareTech like-for-like revenue GBP98.2m GBP87.6m 12%
---------- ---------- -------
Underlying EBITDA(i) GBP33.3m GBP19.5m 71%
---------- ---------- -------
CareTech like-for-like EBITDA GBP20.2m GBP19.5m 4%
---------- ---------- -------
Underlying profit before tax(ii) GBP20.7m GBP13.8m 50%
---------- ---------- -------
Underlying basic earnings per
share(ii) 15.82p 14.86p 7%
---------- ---------- -------
Statutory profit before tax GBP6.9m GBP8.5m (19)%
---------- ---------- -------
Statutory earnings per share 5.77p 8.62p (33)%
---------- ---------- -------
Operating cashflow before non
underlying items (GBPmillion) GBP28.2m GBP19.1m 48%
---------- ---------- -------
Net debt ((iii) GBP293.0m GBP147.0m 99%
---------- ---------- -------
Net assets GBP328.4m GBP208.3m 58%
---------- ---------- -------
Interim dividend 3.75p 3.50p 7%
---------- ---------- -------
Commenting on the results, Farouq Sheikh, Executive Chairman of
CareTech, said:
"I am delighted to be reporting our first financial results
following the acquisition of Cambian in October 2018. The Group's
performance reflects the scale of the acquisition and delivers a
substantial increase in revenue and EBITDA compared with the same
period last year.
"I am pleased to report that the Group's trading performance in
the year to date is in line with market expectations and we have
delivered on all of our key work streams, all of which have been
achieved with the backdrop of the Cambian acquisition, the
subsequent CMA investigation and the sad passing of our Finance
Director, Michael Hill.
"Like for like, the performance of the CareTech business in the
half year was stronger when compared with the same period last
year. The EBITDA margins of the CareTech business are in line with
market expectations and the EBITDA margins of the Cambian business,
before synergies, show considerable improvement when compared with
their historic announced margins.
"The integration plan for the combined business is well underway
following the unconditional clearance issued by the CMA in February
2019. The Group confirms that synergies of at least GBP3m of cost
savings, in the first full year since acquisition, are on track to
being delivered.
"CareTech has grown into a leading national provider of social
care and education services to some of the most vulnerable people
in our society. These results build on the foundations we have laid
out over the last 25 years and we look forward to the future with
confidence."
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 finance leases.
For further information, please contact:
CareTech Holdings PLC
Farouq Sheikh, Executive Chairman
Gareth Dufton, Interim Group Finance
Director 01707 601800
Buchanan (PR Adviser)
Mark Court
Sophie Wills
Tilly Abraham 020 7466 5000
Panmure Gordon (Nomad and Joint
Broker)
Emma Earl
Freddy Crossley
Charles Leigh-Pemberton 020 7886 2500
WH Ireland (Joint Broker)
Adrian Hadden
Jessica Cave
Matthew Chan 020 7220 1666
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 and education services, supporting around 4,500 adults and
children with a wide range of complex needs in more than 550
residential facilities and specialist schools around the UK and
employing approximately 10,000 staff.
Committed to the highest standards of care and care governance,
CareTech provides its innovative care pathways covering; Adult
learning disabilities and specialist services; Children's
residential and education services; and foster care.
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
Chairman's Statement
A transformational six months
The six month period to 31 March 2019 has been transformational
for CareTech following the acquisition of Cambian in October 2018.
In the year that we are celebrating our 25(th) Anniversary in care,
the Group has become a leading national social care provider to
young people and adults and is now the largest provider of care and
education services to children in the UK. The acquisition of
Cambian was immediately followed by the CMA placing a hold separate
embargo over the combined business for which the Group received
unconditional clearance in mid-February 2019. As part of the
acquisition, the Group renewed its banking facilities until 2022
and 2023 and in January completed a ground rent transaction raising
GBP31m net proceeds. CareTech's organic developments have continued
with the addition of 39 new beds in the half year whilst
reconfigurations and supported living contracts coming to an end
have resulted in a net increase of 6 places for CareTech. The
integration of the Cambian business is now well underway and
synergies identified as planned.
The Group's innovative Care Pathways, which now include those
specialist children's education and therapeutic foster care
services delivered by Cambian, deliver positive outcomes for
individuals in the Group's care, which together with the cash flows
available put the Group in a strong position to continue growing
market share.
The financial results for this period show significant increases
in Revenue and EBITDA reflecting the Cambian acquisition. This
report includes presentational changes first outlined in the
trading update issued on 1 May 2019 to reflect the on-going
integration of the two businesses, most notably, in the reporting
of operational information which is presented as the following
three outcome-based operating divisions: Adult Services, Children's
Services and Foster Care.
Like for like, CareTech's underlying performance reflects the
strategic initiatives undertaken over recent years and has
delivered a stronger performance compared with the same period last
year. Furthermore, Cambian's results deliver increased Revenue,
underlying EBITDA and EBITDA margins when compared to the same
period last year.
Cambian shares CareTech's commitment to delivering the highest
standards of care and the strategy of working with care
commissioners to deliver innovative services. Together, the
enlarged Group benefits from favourable demographics underpinned by
the growth in outsourcing to the private sector and from the
increasingly stringent regulatory environment, which is driving
consolidation in a fragmented market.
Looking forward, the Group will continue with the integration
plan and delivering the synergies as set out at the time of
acquisition. Continued growth is underpinned by the strong
foundation built over the past few years and the Group continues to
develop and grow all the three operating divisions with particular
focus on higher acuity service provision. The Group will continue
to extend both the geographic coverage and the range of outcome
based Care Pathway services organically and through bolt-on
acquisitions and the purchase of properties to meet the needs of
the marketplace, specifically the requirement for greater acuity
service provision.
This ensures that CareTech is in a very strong position to
address the demands of the evolving marketplace and the Board
remains confident of the Group's performance for the remainder of
the year.
Acquisition, share issue and bank facilities
On 19 October 2018, CareTech Holdings plc acquired the entire
share capital of Cambian, a leading children's specialist education
and behavioural health service provider. Cambian's services have a
specific focus on children who present high severity needs with
challenging behaviours and complex care requirements. Cambian
currently looks after over 2,000 children and employs over 4,500
people across a portfolio of 222 residential facilities, specialist
schools and fostering offices located in England and Wales.
The headline consideration for the acquisition was GBP360m (of
which GBP241.7m was paid in cash), with the net price paid being
GBP278.5m reflecting GBP81.5m of net cash held by Cambian on the
date of acquisition. The acquisition was funded by the issue of
33.2m shares and new bank facilities. A bridge facility was in
place to fund the acquisition and was subsequently repaid in full.
A provisional acquisition table is included in note 7 to the
accounts below.
New banking facilities include term loans of GBP322m and an
undrawn revolving credit facility of GBP25m. In April 2019, the
Group entered into a number of interest rate swaps as part of a
hedging strategy.
Results
Included in the Group consolidated results for the six months
ended 31 March 2019 are Cambian's Revenue, EBITDA and other income
statement items together with cash flows for the period following
completion on 19 October 2018.
Group Revenue in the half year has increased by 119.8% when
compared with the same period last year. The split of Revenue is
GBP98.3m for CareTech and GBP94.2m for Cambian. Like-for-like
CareTech's Revenue in the period increased by 12.2% from
GBP87.6m
Group underlying EBITDA(i) of GBP33.3m (2018: GBP19.5m),
represents growth of 70.8% when compared with the same period last
year. The split of EBITDA is GBP20.2m for CareTech and GBP13.1m for
Cambian.
The underlying EBITDA(i) margin was 17.3% (2018: 22.3%). This
reflects the acquisition of Cambian whose margins are historically
lower than the CareTech EBITDA margins. Like-for-like, CareTech
EBITDA grew by 4% to GBP20.2m with overall EBITDA margins at 20.6%
(H1 2018: 22.3%) the change reflecting the mix of the business and
the timing of a number of reconfigurations in the first half of the
year.
Cambian's EBITDA margin, before synergies, was 13.2% which
reflects a considerable increase on the 10.9% margin for the same
period in 2018.
Underlying profit before tax(ii) increased by 50% to GBP20.7m
(2018: GBP13.8m) and underlying basic earnings per share(ii) was
15.82p (2018: 14.86p), representing an improved return to
shareholders following the Cambian acquisition.
During this period, the Group also maintained focus on taking
the operational platform forward to the next stage of development
in what is a growing and changing market. The Group has invested
GBP14.2m in the period (2018: GBP5.5m) in the property estate in
order to provide the appropriate quality and resource to drive
medium term organic growth. Property Estate expenditure includes a
specialist children's residential service in Herefordshire, a
service in Lancashire and the refurbishment of a mental health
hospital in Hampshire. Also included in this capital investment is
GBP6.0m paid by Cambian to acquire freehold properties for
previously leasehold operations that were either committed to prior
to the acquisition of Cambian or were required to be able to
continue to trade from these locations and created no new capacity
in the period.
Care Commissioners continue to demand flexible high-quality care
solutions and favour operators able to deliver across the care
pathway. The 2018 reconfigured services that have opened are
already experiencing strong levels of demand from local authorities
for referrals, validating the strategy of reconfiguration focusing
upon greater acuity service provision.
A key feature of this business is its strong cash generation.
For the period 1 October 2018 to 31 March 2019 Cambian has a 100%
EBITDA to cash conversion (iii) and CareTech has a 97% conversion.
Cambian was acquired mid-October and in the pre-acquisition period
(from 1 October to 18 October 2018) there were particularly strong
cash receipts. The mid-month acquisition resulted in the Group
being unable to count these receipts in the conversion calculation,
whilst the payrolls (which typically go out at the end of the
month) are all counted in the consolidated Group cash flows. Taking
this into account, the EBITDA to operating cash conversion for the
consolidated Group is 85%.
Other key cash flows in this period include payment of
integration costs of GBP2.4m, payment of acquisition costs of
GBP13.9m, payment of the interim dividend of GBP2.6m and
corporation tax payments of GBP2.8m. As a result of this, and the
proceeds from the ground rent transaction, net debt was GBP293.0m
as at 31 March 2019.
Net assets have increased by GBP120.2m to GBP328.4m as at 31
March 2019 due to the acquisition of Cambian and compared with
March 2018 this is an increase of 58%.
In the trading update issued on 1 May 2019, CareTech announced
that annual fee rate negotiations with local authorities have begun
and the Group anticipate a favourable response when compared with
previous years. The National Living Wage increased from 1 April
2019, as did increases to both employer and employee pension
contributions which, in addition to having a positive impact on
staff pay, the Group believes will also have a positive impact on
discussions with local authorities, who recognise that front line
staff are an integral part of quality care delivery. Accordingly,
the Group expects fee increases to cover the additional costs
resulting from increases in front line staff pay and pension
contributions.
Service user capacity and occupancy
Capacity as at 31 March 2019 was 5,072 places with CareTech
having 2,628 places and Cambian, 2,444 places. Since September
2018, CareTech's organic developments have continued with the
addition of 39 new beds whilst reconfigurations reduced capacity by
13 beds. A further 20 supported living contracts came to an end,
resulting in a net increase of 6 places for CareTech. The
reconfigured beds, together with the 6 additional places and the
additional capacity which came online towards the end of the 2018
financial year end underpins growth in revenues going forwards.
Blended and mature occupancy of 87% and 93% compares favourably to
the last trading update (30 September 2018: 86% and 93%
respectively). There has been no net change in the number of places
at Cambian from the date of acquisition by the Group.
Ground rent transaction
In January 2019, the Group announced that it had completed a
ground rent transaction with funds managed by Alpha Real Capital
LLP ("Alpha") at a net initial yield of 2.85%. This transaction
builds on the previous transaction with Alpha in February 2016.
Under the terms of the agreement, the freehold interest in 24
CareTech properties ("the Properties") were transferred to Alpha in
exchange for a net cash sum of GBP31.0m and security of tenure with
a 150-year lease term returning to CareTech a virtual freehold
interest in each property. The commencing rent will be GBP1.0m per
annum, which will rise with the Retail Price Index on a yearly
basis between 0% and 5% per annum. The Properties are located
across England and Scotland, representing less than 8% of the
aggregate number of freehold properties owned by the Group.
Cambian Integration and synergies
Following the unconditional clearance of the acquisition from
the CMA in February 2019, the integration of the two businesses
commenced. Significant headway has been made into this at the date
of this report as the integration of the Senior Management team has
commenced, a plan is in place around the integration of a number of
the back-office support functions and an IT strategy is in place.
The Board is confident that the integration of the two businesses
can be achieved without undue disruption to the underlying
operations of each business.
From 30 June 2019, CareTech's COO, John Ivers, who has been with
the business for four years, is taking the operational lead across
the Group, becoming Group COO. This will drive a cohesive approach
to the adoption of a Group wide business model, which will deliver
the best possible outcomes for the people in the Group's care. We
also announce that Anne Marie Carrie, Cambian Group COO, has taken
the decision to retire from Cambian.
It was identified in the prospectus dated 19 September 2018 that
the Group expected to realise synergies of GBP3m of cost savings at
profit before tax in the first full year following the acquisition
of Cambian. This is expected to be followed by GBP5m in the second
full year and GBP6m by the third full year following
acquisition.
The Group reports that it is on track to deliver the first full
year synergies as set out in the prospectus and has visibility on
the second full year savings. Initiatives that have already been
implemented include, inter alia;
-- The former CEO, CFO and all non-Executive Board members of Cambian have left the Group;
-- A number of senior management savings have been delivered;
-- A number of back-office functions have already been integrated and costs saving identified;
-- A number of ongoing IT costs have been streamlined and a new IT strategy put in place;
-- The Group have exercised a break clause on the lease of the
Cambian head office in Hammersmith; and
-- A number of non-staff synergy savings have been made.
In the half year, the acquisition of Cambian has given the Group
a broader geographic and acuity service offering which it shall
seek to capitalise on over the coming years. Whilst the Group will
focus on the integration of Cambian, delivering the synergies
targets and improving its margins, the Group has continued, and
will continue, to review its offering and increase capacity
offering new and innovative services. The improvement in Cambian's
EBITDA margins will be achieved through increased staff retention
and improved quality ratings which lead to increased occupancy
levels which in turn lead to increased EBITDA margins. The increase
in the EBITDA margin in the period to 13.2% (June 2018: 10.9%)
before synergies demonstrates that Cambian are on track to deliver
the medium term EBITDA margin target.
Operating review
Following the acquisition of Cambian, it was announced that the
Group will change the reported operating segments to more
accurately reflect the Group's management and internal reporting
structure, a review of each operational division is set out
below:
(1) Adult Services
Adult Services comprises the core CareTech Adult Learning
Disabilities business (ALD) as well as the much smaller Specialist
Services business (SS) and Learning Services business.
The Adult Services capacity is 1,971 with revenue growing by
6.7% to GBP62.1m (2018: GBP55.2m) and EBITDA remained at GBP15m,
whilst EBITDA margins changed from 26% to 24%. This change reflects
the change in mix of the business as the number of supported living
beds grew and the timing of a number of reconfigurations which will
come on stream in the second half of the year.
Across the Group the focus on quality continues with CQC quality
ratings at 94% Good or Outstanding in Adult Services, which
compares favourably to the national average of 82% and against our
last update report.
The Group offers a flexible, person-centred approach with
support offered on an individual planned basis both within a
registered residential setting and in step-down supported housing.
Demand remains high across the spectrum for the support of people
with learning disabilities and the Group recognises an increasing
complexity of need for referrals to specialist services within the
Group. CareTech's Adult Services care pathway includes residential
care homes, independent supported living, community outreach, the
Northamptonshire based Oakleaf with its care and rehabilitation for
acquired brain injury and a newly developed wing of a specialist
mental health facility in Fareham.
(2) Children's Services
Children's Services comprises CareTech's and Cambian's
children's residential and education services.
Children's services capacity is 1,934 split between CareTech
(356 places) and Cambian (1,578 places). Revenues for the division
were GBP110.8m analysed as Caretech GBP32.1m and Cambian
GBP78.7m.
EBITDA for this division was GBP26.5m analysed as CareTech
GBP8.4m and Cambian GBP18.1m.
Like-for-like, CareTech's revenues increased by 27.4% and EBITDA
by 20.4% reflecting the increased capacity from the cap-ex invested
in the 2018 financial year. EBITDA increased from GBP7.0m to
GBP8.4m whilst EBITDA margins decreased by 1% to 26%.
The Group's Children's Services provides care, support and
education to young people with complex behavioural problems,
physical impairments, learning disabilities and emotional
behavioural disorders ('EBD'). The Group operates services that
cater for local needs but also manage certain highly specialised
services that have a national catchment. The Cambian acquisition
has increased the geographic spread of children's services across
the UK as well as increasing the types of services being offered
including complex needs, Social, Emotional and Mental Health
("SEMH") and Child and Adolescent Mental Health Services
("CAMHS").
The OFSTED ratings for the CareTech services are 89% Good or
Outstanding and 77% for the Cambian services resulting in a blended
78% Good and Outstanding ratings for children's services across the
Group.
(3) Foster Care
Foster Care comprises CareTech's and Cambian's fostering
services.
Foster Care capacity is 1,167 split between CareTech (301
places) and Cambian (866 places). Revenues for the division were
GBP19.6m analysed as Caretech GBP4.1m and Cambian GBP15.5m.
EBITDA for this division was GBP3.7m analysed as CareTech
GBP0.8m and Cambian GBP2.9m.
Like-for-like, CareTech's revenues were maintained and EBITDA
fell by GBP0.1m to GBP0.8m reflecting a small increase in the cost
base. For CareTech, Foster Care was less than 5% of its overall
business.
Cambian's Foster Care business is branded "By-the-Bridge" and
offers a more specialist therapeutic service. With a combined
capacity of 1,167 places, the Group has established one of the
largest independent fostering agencies in England and Wales. There
is a significantly increased demand for foster care for children
who might otherwise have entered the residential care system.
Foster care represents much better value for commissioners but the
complexity of children being referred will often make the matching
process quite complex, favouring larger agencies like CareTech and
By-the-Bridge with a greater range of well supported foster
carers.
Our People
On 1 May 2019, The Board announced the appointment of Professor
Moira Livingston as a Non-Executive Director. Moira has many years
of experience in health and social care, latterly as a senior
clinical leader and manager in the NHS, and will Chair the Group's
Care Governance and Safeguarding Committee.
It was also announced that Mike Adams OBE, has become an
Executive Director in order to pursue a strategic role within the
Group and to push forward the Purple business model.
The Group continues to seek the appointment of an additional
Non-Executive Director and a further announcement will be made in
due course.
In terms of staff retention, the Group's annualised retention
rate sits at 74% (which is analysed as 77% for CareTech employees
and 71% for Cambian employees) and when compared with the industry
average of under 70% remains favourable.
As an employer, CareTech is a registered apprenticeship training
provider in its own right and the Board is convinced of the
benefits that the in-house apprenticeship programme has had for
both staff and for service users. The apprenticeship levy is an
opportunity to continue to deliver excellence in the care sector
and is a tangible example of the Group's commitment to the
development of its 10,000 staff. The Group's internal training
department, through the Aspire Programme delivered over 60,000
learning interventions last year of which 26,000 were classroom
based. This commitment to training and development leads to staff
being trained to deliver the highest quality care for the
individuals supported by the Group.
The Group has a number of SAYE schemes in place as well as share
schemes for its senior executives and operational staff. Several
hundred colleagues took advantage of the 2016 SAYE scheme at a
share price of 194p and will see real value now that the scheme has
matured.
Focus remains on attracting and retaining the best talent in the
sector; the Group continuously focuses on employee engagement and
will again this year look to offer the SAYE scheme to all staff as
well as share options plans for Executives and management
teams.
Social Responsibility
The CareTech Charitable Foundation was created in 2017 and in
early 2018 launched three partnerships with matched funding
relevant to the care sector with Barnados, British Asian Trust and
Skills for Care.
CareTech is delighted to have officially supported Special
Olympics Great Britain (Team SOGB) at the March 2019 Special
Olympics World Summer Games, held in Abu Dhabi, United Arab
Emirates (UAE), with over 190 countries participating in a truly
spectacular and successful global event. CareTech's involvement
with Team SOGB and the World Games arose from the close pathway
affinity between our national expertise in supporting people with
learning disabilities through our living, learning and employment
support services and the Special Olympics movement using sport to
build confidence, skill and determination for athletes with
intellectual and learning disabilities as a gateway to empowerment,
competence, acceptance and joy. The Games were a real highlight on
the 2019 world sporting humanitarian calendar and Team SOGB
excelled against the competition winning an outstanding tally of 61
Gold, 57 Silver and 46 Bronze Medals.
Dividend
Our policy continues to be to increase the dividend broadly in
line with the movement in underlying diluted earnings per share.
Given the consistent earnings growth and cash generation the Board
is therefore declaring an interim dividend of 3.75p (2018: 3.50p)
per share, to be paid on 21 November 2019 to shareholders on the
Register of Members on 24 October 2019 with an associated record
date of 25 October 2019. The full year dividend will be reviewed at
the year end. The Ordinary shares of CareTech will be marked
ex-dividend on 24 October 2019.
Outlook and prospects
The continued provision of first-class social care which
represents good value and is focused on successful client outcomes
will remain the main market driver for the Group's continuing
growth. The Group will continue to work in partnership with Local
Authorities to deliver innovative services focused on delivering
positive outcomes for individuals.
With a strengthened management team, having undertaken a major
acquisition and with improved Bank facilities in place together
with cash from the ground rent transaction, the Group is well
placed to take advantage of opportunities for further consolidation
in the sector and for organic growth.
Farouq Sheikh
Chairman
20 June 2019
(i) Underlying EBITDA is operating profit before depreciation,
share-based payments charge and non underlying items (explained in
note 3);
(ii) Underlying profit before tax and underlying diluted
earnings per share are stated before non underlying items
(explained in note 3).
(iii) EBITDA to cash conversion is calculated as operating cash
flows before non underlying items divided by underlying EBITDA
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 31 March 2019
Six months ended Six months ended Year ended
31 March 2019 31 March 2018 30 September 2018
unaudited unaudited audited
---------------------------------------------------------------------------------------- ----- ----------------------- ----------------------- -----------------------
Before non Before non Before non
underlying Total underlying Total underlying Total
items(i) Unaudited items(i) unaudited items(i) audited
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------------------------------------------------------------- ----- ----------- ---------- ----------- ---------- ----------- ----------
Revenue 2 192,510 192,510 87,569 87,569 185,689 185,689
Cost of sales (131,684) (131,684) (56,906) (56,906) (120,387) (120,387)
---------------------------------------------------------------------------------------- ----- ----------- ---------- ----------- ---------- ----------- ----------
Gross profit 60,826 60,826 30,663 30,663 65,302 65,302
Administrative expenses (33,494) (46,913) (14,387) (19,783) (27,543) (45,116)
---------------------------------------------------------------------------------------- ----- ----------- ---------- ----------- ---------- ----------- ----------
Operating profit 27,332 13,913 16,276 10,880 37,759 20,186
EBITDA 3 33,349 33,349 19,502 19,502 43,862 43,862
Depreciation (5,957) (5,957) (3,166) (3,166) (5,906) (5,906)
Share-based payments charge (60) (60) (60) (60) (197) (197)
Non underlying items 3 - (13,419) - (5,396) - (17,573)
---------------------------------------------------------------------------------------- ----- ----------- ---------- ----------- ---------- ----------- ----------
Operating profit 27,332 13,913 16,276 10,880 37,759 20,186
---------------------------------------------------------------------------------------- ----- ----------- ---------- ----------- ---------- ----------- ----------
Financial expenses 4 (6,626) (7,067) (2,435) (2,420) (4,867) (4,816)
---------------------------------------------------------------------------------------- ----- ----------- ---------- ----------- ---------- ----------- ----------
Profit before tax (ii) 20,706 6,846 13,841 8,460 32,892 15,370
Taxation 5 (3,922) (660) (2,597) (1,932) (5,751) (4,126)
---------------------------------------------------------------------------------------- ----- ----------- ---------- ----------- ---------- ----------- ----------
Profit for the period 16,784 6,186 11,244 6,528 27,141 11,244
Non-controlling interest (108) (108) - - (596) (596)
Comprehensive income for the period attributable to equity shareholders of the parent 16,676 6,078 11,244 6,528 26,545 10,648
---------------------------------------------------------------------------------------- ----- ----------- ---------- ----------- ---------- ----------- ----------
Earnings per Share
Basic (ii) 6 15.82p 5.77p 14.86p 8.62p 35.07p 14.07p
Diluted (ii) 6 15.73p 5.73p 14.85p 8.62p 35.06p 14.06p
(i) Underlying EBITDA is operating profit before depreciation,
share-based payments charge and non underlying items (explained in
note 3).
(ii) Underlying profit before tax and underlying diluted
earnings per share are stated before non underlying items
(explained in note 3).
Condensed Consolidated Statement of Changes in Equity at 31
March 2019
Six months ended Six months ended Year ended
31 March 2019 31 March 2018 30 September 2018
unaudited unaudited audited
GBP000 GBP000 GBP000
------------------------------------------------------- ----------------- ----------------- ------------------
Balance at start of period 208,233 204,201 204,201
Total comprehensive income 6,078 6,528 10,648
Transactions with owners recorded directly in equity:
Issue of ordinary shares 116,679 43 42
Equity settled share-based payments charge 60 60 197
Dividends (2,645) (2,499) (7,494)
Minority interest - - 639
------------------------------------------------------- ----------------- ----------------- ------------------
Balance at end of period 328,405 208,333 208,233
------------------------------------------------------- ----------------- ----------------- ------------------
Condensed Consolidated Balance Sheet at 31 March 2019
31 March 2019 31 March 30 September
2018 2018
unaudited unaudited audited
GBP000 GBP000 GBP000
---------------------------------------------------------------- -------------- ---------- -------------
Non-current assets
Property, plant and equipment 600,526 300,410 301,109
Other intangible assets 84,147 40,299 40,128
Goodwill 79,178 43,098 43,689
763,851 383,807 384,926
---------------------------------------------------------------- -------------- ---------- -------------
Current assets
Inventories 998 835 898
Trade and other receivables 55,382 22,609 31,747
Cash and cash equivalents 26,733 10,461 9,421
---------------------------------------------------------------- -------------- ---------- -------------
83,113 33,905 42,066
---------------------------------------------------------------- -------------- ---------- -------------
Total assets 846,964 417,712 426,992
---------------------------------------------------------------- -------------- ---------- -------------
Current liabilities
Loans and borrowings 2,379 13,593 153,830
Trade and other payables 53,763 12,718 24,875
Deferred and contingent consideration payable - 1,652 966
Ground rent liabilities arising under IAS17 100 50 50
Deferred income 37,666 3,213 3,372
Corporation Tax 13,114 7,924 6,836
Derivative financial instruments - 407 152
107,022 39,557 190,081
---------------------------------------------------------------- -------------- ---------- -------------
Non-current liabilities
Loans and borrowings 317,414 143,840 2,580
Provisions 14,936 - -
Deferred and contingent consideration payable - 1,133 -
Ground rent liabilities arising under IAS17 15,057 7,268 7,244
Deferred tax liabilities 64,130 17,516 18,854
Derivative financial instruments - 65 -
411,537 169,822 28,678
---------------------------------------------------------------- -------------- ---------- -------------
Total liabilities 518,559 209,379 218,759
---------------------------------------------------------------- -------------- ---------- -------------
Net assets 328,405 208,333 208,233
---------------------------------------------------------------- -------------- ---------- -------------
Equity attributable to equity shareholders of the parent
Share capital 545 379 379
Share premium 120,820 120,821 120,820
Shares held by Employee Benefit Trust (4,750) (4,750) (4,750)
Merger reserve 125,535 9,023 9,023
Non-controlling interest 769 - 639
Retained earnings 85,486 82,860 82,122
---------------------------------------------------------------- -------------- ---------- -------------
Total equity attributable to equity shareholders of the parent 328,405 208,333 208,233
---------------------------------------------------------------- -------------- ---------- -------------
Consolidated Cash Flow Statement for the six months ended 31
March 2019
Six months ended Six months ended Year ended
31 March 2019 31 March 2018 30 September 2018
unaudited unaudited audited
GBP000 GBP000 GBP000
---------------------------------------------------- ----------------- ----------------- ------------------
Cash flows from operating activities
Profit before tax 6,846 8,460 15,370
Financial expenses 7,067 2,420 4,816
Termination of onerous contracts - 727 377
Depreciation 5,957 3,166 5,906
Amortisation of intangible assets 4,922 3,558 7,428
Charitable foundation donation 390 - 380
Share-based payments charge 60 60 197
Acquisition transaction costs 10,318 - 2,967
Integration and restructuring costs 2,354 1,111 2,863
Impairment of goodwill - - 2,000
Profit arising from ground rent transactions (4,565) - -
Adjustments relating to prior acquisitions - - 1,558
Operating cash flows before movement in working 33,349 19,502 43,862
capital and non underlying items
(Increase) in Inventory (100) - (63)
(Increase)/decrease in trade and other receivables (3,226) 910 (8,228)
(Decrease)/increase in trade and other payables (1,812) (1,317) 3,875
Operating cash flows before non underlying items 28,211 19,095 39,446
Integration and restructuring costs (2,354) (1,111) (3,652)
Payment of charitable donations (390) - (380)
Payments under onerous contracts - (727) (377)
---------------------------------------------------- ----------------- ----------------- ------------------
Cash inflows from operating activities 25,467 17,257 35,037
Tax paid (2,818) (1,426) (4,135)
---------------------------------------------------- ----------------- ----------------- ------------------
Net cash from operating activities 22,649 15,831 30,902
---------------------------------------------------- ----------------- ----------------- ------------------
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 31,026 - 1,201
Business combinations net of cash acquired (Note 7) (160,271) (939) (72)
Acquisition of property, plant and equipment (14,866) (5,536) (14,519)
Acquisition of software (858) (2,901) (2,538)
Payment of deferred consideration (966) - -
Payment of acquisition costs (13,902) - (839)
----------------------------------------------------------------- ---------- --------- ---------
Net cash used in investing activities (159,837) (9,376) (16,767)
----------------------------------------------------------------- ---------- --------- ---------
Cash flows from financing activities
Proceeds arising from the issue of share capital (net of costs) - 43 42
Interest paid (4,773) (2,397) (4,650)
Cash outflow arising from derivative financial instruments (594) (340) (649)
Bank loans drawdown 431,910 3,883 11,035
Loan arrangement fees (4,696) - (1,436)
Repayment of borrowings (263,576) - (5,775)
Payment of finance lease liabilities (1,126) (1,086) (2,189)
Dividends paid (2,645) (2,499) (7,494)
----------------------------------------------------------------- ---------- --------- ---------
Net cash generated from financing activities 154,500 (2,396) (11,116)
----------------------------------------------------------------- ---------- --------- ---------
Net change in cash and cash equivalents 17,312 4,059 3,019
----------------------------------------------------------------- ---------- --------- ---------
Cash and cash equivalents at start of the period 9,421 6,402 6,402
----------------------------------------------------------------- ---------- --------- ---------
Cash and cash equivalents at end of the period 26,733 10,461 9,421
----------------------------------------------------------------- ---------- --------- ---------
Net debt as defined by the Group's banking facilities
comprises:
31 March 2019 31 March 2018 30 September 2018
unaudited unaudited audited
GBP000 GBP000 GBP000
------------------------------- -------------- -------------- ------------------
Cash and cash equivalents 26,733 10,462 9,421
Loans and borrowings (319,793) (157,433) (156,410)
Net debt at end of the period (293,060) (146,971) (146,989)
------------------------------- -------------- -------------- ------------------
Notes
1. Accounting policies
This interim report has been prepared on the basis of the
accounting policies expected to be adopted for the year ending 30
September 2019. These are anticipated to be in accordance with the
Group's accounting policies as set out in the latest annual
financial statements for the year ended 30 September 2018 together
with the adoption of IFRS 9 and IFRS 15.
All International Financial Reporting Standards ("IFRS"),
International Accounting Standards ("IAS"') and interpretations
currently endorsed by the International Accounting Standards Board
("IASB") and its committees as adopted by the EU and as required to
be adopted by AIM-listed companies have been applied. AIM-listed
companies are not required to comply with IAS 34 'Interim Financial
Reporting' and accordingly the Company has taken advantage of this
exemption.
In the current year, the following new and revised standards and
interpretations have been adopted:
IFRS 9 Financial Instruments
IFRS 15 Revenue from Contracts with
Customers
--------------------------------------
Clarifications to IFRS 15 (Apr Clarifications to IFRS 15 Revenue
2016) from Contracts with Customers
--------------------------------------
IFRIC 22 Foreign Currency Transactions
and Advance Consideration
--------------------------------------
Amendments to IFRS 2 (Jun 2016) Classification and Measurement
of Share-based Payment Transactions
--------------------------------------
Amendments to IFRS 4 (Sept 2016) Applying IFRS 9 Financial Instruments
with IFRS 4 Insurance Contracts
--------------------------------------
Amendments to IAS 40 (Dec 2016) Transfers of Investment Property
--------------------------------------
The amendments listed above which were adopted did not affect
the amounts reported in these interim financial statements.
The financial information in this interim report does not
constitute statutory accounts for the six months ended 31 March
2019 and should be read in conjunction with the Group's annual
financial statements for the year ended 30 September 2018.
Financial information for the year ended 30 September 2018 has been
derived from the consolidated audited accounts for that period
which were unqualified.
The condensed consolidated interim financial statements for the
six months to 31 March 2019 have not been audited or reviewed by
auditors pursuant to the Auditing Practices Board guidance on
Review of Interim Financial Information.
This unaudited interim report was approved by the Board on 19
June 2019.
2. Segmental information
IFRS 8 requires operating segments to be determined based on the
Group's internal reporting to the Chief Operating Decision Maker
("CODM"). The CODM has been determined to be the Chief Executive
Officer as he is primarily responsible for the allocation of
resources to segments and the assessment of the performance of each
of the segments.
The CODM uses underlying EBITDA as reviewed at monthly Executive
Committee meetings as the key measure of the segments' results as
it reflects the segments' underlying trading performance for the
period under evaluation. Underlying EBITDA is a consistent measure
within the Group.
Inter-segment turnover between the operating segments is not
material.
The interim results report segmental information on the Group's
three operating divisions (and the comparative information has been
represented on this basis):
-- Adults Services, comprising the core CareTech Adult Learning
Disabilities business (ALD) as well as the much smaller Specialist
Services business (SS) and Learning Services;
-- Children's Services, comprising CareTech's and Cambian's children's services; and
-- Foster Care, comprising CareTech's and Cambian's fostering services.
For the current financial year ending 30 September 2019, the
Group will also provide the segmental data for the historic
CareTech and Cambian businesses to enable a like for like analysis
in the first year following the acquisition. For subsequent
financial years, the results of the Group will be combined on the
basis of the operating segments described above.
The segmental results for the six months ended 31 March 2019
(noting that the results of Cambian are for the period from 19
October 2018), six months ended 31 March 2018 and year ended 30
September 2018 and the reconciliation of the segment measures to
the respective statutory items included in the consolidated
financial information are as follows:
6 months to 31 March 6 months to 31 March 12 months to 30 September
2019 2018 2018
unaudited unaudited audited
CareTech Cambian Total CareTech Cambian Total CareTech Cambian Total
----------------- --------- -------- -------- --------- -------- ------- ---------- -------- --------
Adults
Client capacity 1,971 - 1,971 1,946 - 1,946 1,968 - 1,968
Revenue 62,123 - 62,123 58,249 - 58,249 118,736 - 118,736
EBITDA 14,971 - 14,971 15,356 - 15,356 31,885 - 31,885
----------------- --------- -------- -------- --------- -------- ------- ---------- -------- --------
Childrens
Client capacity 356 1,578 1,934 325 - 325 353 - 353
Revenue 32,100 78,704 110,804 25,196 - 25,196 58,707 - 58,707
EBITDA 8,378 18,102 26,480 6,961 - 6,961 17,024 - 17,024
----------------- --------- -------- -------- --------- -------- ------- ---------- -------- --------
Foster Care
Client capacity 301 866 1,167 301 - 301 301 - 301
Revenue 4,049 15,534 19,583 4,124 - 4,124 8,246 - 8,246
EBITDA 792 2,830 3,622 997 - 997 1,898 - 1,898
----------------- --------- -------- -------- --------- -------- ------- ---------- -------- --------
Total 2,628 2,444 5,072 2,572 - 2,572 2,622 - 2,622
Revenue 98,272 94,238 192,510 87,569 - 87,569 185,689 - 185,689
EBITDA 24,141 20,932 45,073 23,314 - 23,314 50,807 - 50,807
----------------- --------- -------- -------- --------- -------- ------- ---------- -------- --------
Reconciliation of EBITDA to profit after tax;
Six months ended Six months ended Year ended
31 March 2019
unaudited
GBP000
-------------------------------------------------------
31 March 2018 30 September 2018
-------------------------------------------- ---------
unaudited audited
GBP000 GBP000
-------------------------------------------- --------- ----------------- ------------------
Underlying EBITDA before unallocated costs 45,073 23,314 50,807
Unallocated costs (11,724) (3,812) (6,945)
-------------------------------------------- --------- ----------------- ------------------
Underlying EBITDA 33,349 19,502 43,862
Depreciation (5,957) (3,166) (5,906)
Share-based payments charge (60) (60) (197)
Non underlying items (13,419) (5,396) (17,573)
-------------------------------------------- --------- ----------------- ------------------
Operating profit 13,913 10,880 20,186
Financial expenses (7,067) (2,420) (4,816)
-------------------------------------------- --------- ----------------- ------------------
Profit before tax 6,846 8,460 15,370
-------------------------------------------- --------- ----------------- ------------------
Taxation (660) (1,932) (4,126)
Non-controlling interest (108) - (596)
-------------------------------------------- --------- ----------------- ------------------
Profit after tax 6,078 6,528 10,648
-------------------------------------------- --------- ----------------- ------------------
All operations of the Group are carried out in the UK, the
Company's country of domicile. All revenues therefore arise within
the UK and all non-current assets are likewise located in the UK.
No single external customer amounts to 10% or more of the Group's
revenues.
No asset and liability information is presented above as this
information is not allocated to operating segments in the regular
reporting to the group's Chief Operating Decision Maker and are not
measures used by the CODM to assess performance and to make
resource allocation decisions.
3. Non underlying items
Non underlying items are those items of financial performance
which, in the opinion of the Directors, should be disclosed
separately in order to improve the readers understanding of the
trading performance of the Group. Non underlying items comprise the
following:
Six months Six months Year
ended ended ended
31 March 2019 31 March 2018 30 September
2018
unaudited unaudited audited
Note GBP000 GBP000 GBP000
------------------------------------------------------ -------- ---------------- ---------------- ----------------
Acquisition expenses (i) 10,318 - 4,525
Integration and restructuring costs (ii) 2,354 1,111 2,863
Profit arising from the ground rent transaction (iii) (4,565) - -
Charitable donations (iv) 390 - 380
Termination of onerous leases - 727 377
Impairment of goodwill - - 2,000
Amortisation of intangible assets 4,922 3,558 7,428
Included in administrative expenses 13,419 5,396 17,573
---------------------------------------------------------------- ---------------- ---------------- ----------------
Fair value movements relating to derivative financial
instruments (v) (153) (468) (787)
Charges relating to derivative financial instruments (v) 86 341 513
IAS 17 lease imputed interest 112 112 223
Finance fees extinguished (vi) 396 - -
------------------------------------------------------ -------- ---------------- ---------------- ----------------
Included in financial expenses 441 (15) (51)
---------------------------------------------------------------- ---------------- ---------------- ----------------
Tax on non underlying items
Tax effect:
Current tax (vii) 101 (349) (1,004)
Deferred tax (viii) (3,363) (316) (621)
------------------------------------------------------ -------- ---------------- ---------------- ----------------
Included in taxation (3,262) (665) (1,625)
---------------------------------------------------------------- ---------------- ---------------- ----------------
Total non underlying items 10,598 4,716 15,897
================================================================ ================ ================ ================
(i) In accordance with IFRS 3 (as revised) items associated with
business combinations have been taken to the income statement as
incurred and includes costs relating to the review by the
Competition and Markets Authority ("CMA").
(ii) The Group incurred a number of costs relating to the
integration of the Cambian acquisition and reorganisation of the
internal operating, finance and management structures.
(iii) Profit arises from a ground rent transaction with Alpha
Real Capital LLP at a net yield of 2.85% and which raised GBP31.0m
in cash to further support its growth strategy.
(iv) These charges represent charitable donations made to the
Caretech Charitable Foundation, an independent grant- making
corporate foundation registered with the Charity Commission. Funded
and founded by Caretech Holding plc, the Foundation has an
independent Board of trustees responsible for delivering its
Charitable Objects. The Trustees include Haroon and Farouq Sheikh,
Directors of the Group.
(v) Non underlying items relating to the derivative financial
instruments include the movements during the year in the fair value
of the Group's interest rate swaps which are not designated as
hedging instruments and therefore do not qualify for hedge
accounting, together with the quarterly cash settlements and
accrual thereof.
(vi) Finance fees extinguished relate to finance fees paid on
bank facilities which were replaced as part of the Cambian
acquisition.
(vii) Represents the current tax on items (ii) and (iv)
above.
(viii) Deferred tax arises in respect of the following:
Six months ended Six months ended Year
Ended
31 March 2019 31 March 2018 30 September 2018
unaudited unaudited audited
GBP000 GBP000 GBP000
---------------------------------------------- ---- ----------------- ----------------- ------------------
Derivative financial instruments (note iv) (59) (80) (134)
Full provision for deferred tax under IAS 12 402 - 846
Roll over relief (776) - -
Intangible assets 1,134 - (124)
Other adjustments - 396 (6)
Prior year adjustments 2,662 - 39
---------------------------------------------------- ----------------- ----------------- ------------------
Total 3,363 316 621
---------------------------------------------------- ----------------- ----------------- ------------------
4. Financial expenses Six months Six months ended Year
ended ended
31 March 2019 31 March 2018 30 September 2018
unaudited unaudited audited
GBP000 GBP000 GBP000
--------------------------------------------------------------- -------------- ----------------- ------------------
On bank loans and overdrafts 6,498 2,299 4,527
Finance charges in respect of finance leases 128 136 340
--------------------------------------------------------------- -------------- ----------------- ------------------
Financial expenses before non underlying items 6,626 2,435 4,867
Amounts relating to derivative financial instruments (note 3) (67) (127) (274)
IAS 17 leases imputed interest (note 3) 112 112 223
Finance fees extinguished (note 3) 396 - -
Total financial expenses 7,067 2,420 4,816
--------------------------------------------------------------- -------------- ----------------- ------------------
5. Taxation Six months Six months ended Year
ended ended
31 March 2019 31 March 2018 30 September 2018
unaudited unaudited audited
GBP000 GBP000 GBP000
----------------------------------------------------------- -------------- ----------------- ------------------
Current tax expense
Current period 3,922 2,608 4,622
Non underlying items (note 3) 101 (349) (1,004)
Corporation tax overprovided in previous periods - - 359
Total current tax 4,023 2,259 3,977
----------------------------------------------------------- -------------- ----------------- ------------------
Deferred tax expense
Current period - (11) 873
Deferred tax on non underlying items (note 3) (3,363) (316) (621)
Prior year - - (103)
Total deferred tax (3,363) (327) 149
----------------------------------------------------------- -------------- ----------------- ------------------
Total tax in the consolidated statement of comprehensive
income 660 1,932 4,126
----------------------------------------------------------- -------------- ----------------- ------------------
Effective tax rate on profit before tax (before non
underlying items) 19% 19% 9%
----------------------------------------------------------- -------------- ----------------- ------------------
6. Earnings per share Six months ended Six months ended Year
ended
31 March 2019 31 March 2018 30 September 2018
unaudited unaudited audited
GBP000 GBP000 GBP000
------------------------------------------------------------ ----------------- ----------------- ------------------
Profit attributable to ordinary shareholders 6,078 6,528 10,648
Non underlying items (note 3) 10,598 4,716 15,897
Profit attributable to ordinary shareholders before
underlying items 16,676 11,244 26,545
Weighted number of shares in issue for basic earnings per
share 105,415,473 75,689,416 75,690,422
Effects of share options in issue 600,608 23,467 25,235
------------------------------------------------------------ ----------------- ----------------- ------------------
Weighted number of shares in issue for diluted earnings per
share 106,016,081 75,712,883 75,715,657
------------------------------------------------------------ ----------------- ----------------- ------------------
Diluted earnings per share is the basic earnings per share
adjusted for the dilutive effect of the conversion into fully paid
shares of the weighted average number of share options outstanding
during the period.
Earnings per share (pence per share)
Basic 5.77p 8.62p 14.07p
Diluted 5.73p 8.62p 14.06p
Earnings per share before non underlying items (pence per share)
Basic 15.82p 14.86p 35.07p
Diluted 15.73p 14.85p 35.06p
------------------------------------------------------------------ ------- ------- -------
7. Business Combinations
On the 19 October 2018 Caretech Holdings plc acquired the entire
share capital of Cambian Holdings plc for GBP359.9m.
Cambian is a leading Children's specialist education and
behavioural health service provider looking after around 2,000
children across a portfolio of 222 residential facilities,
specialist schools and fostering offices. It employs over 4,500
people. The rationale for the acquisition was:
- The acquisition of Cambian is a unique opportunity for
investors to enhance exposure to the growing UK market for social
care services for children and adults.
- Highly complementary service offering and geographical
coverage providing a nationwide integrated care pathway focused on
higher acuity social care.
- Combined operational expertise to better service local
authority partners, deliver strong user outcomes, implement
positive staff engagement and improve care quality.
- Opportunity to unlock significant value through a compelling
strategic fit, tangible near-term synergies and enhanced trading
liquidity.
The book values attributable to the acquisition were GBP201.9m
net assets and provisional fair value and adjustments were
GBP122.6m.
The provisional acquisition table is as follows:-
Fair value
Book values adjustments Total
GBP000s GBP000s GBP000s
Intangible assets 38,496 8,859 47,355
Property plant & equipment 165,096 142,474 307,570
Trade and other receivables 11,366 (2,000) 9,366
Prepayments 2,532 2,532
Cash 81,467 81,467
Trade and other payables (46,570) (1,000) (47,570)
Deferred income (21,965) (21,965)
Corporation tax (5,073) (5,073)
Finance leases (515) (515)
Deferred Tax (22,912) (25,727) (48,639)
Net Assets on acquisition 201,922 122,606 324,528
----------------------------- ------------ ------------- ---------
Consideration paid 359,920
----------------------------- ------------ ------------- ---------
Goodwill 35,392
----------------------------- ------------ ------------- ---------
Consideration paid was: GBP000
----------------------------- ------------ ------------- ---------
Cash 241,738
Settled in Shares 118,182
----------------------------- ------------ ------------- ---------
Total consideration 359,920
----------------------------- ------------ ------------- ---------
Reconciliation to the
cash flow statement GBP000
----------------------------- ------------ ------------- ---------
Cash paid 241,738
Cash acquired (81,467)
----------------------------- ------------ ------------- ---------
Payments for business combination net of cash
acquired 160,271
---------------------------------------------------------- ---------
Goodwill arises as a result the surplus of consideration over
the fair value of the separately identifiable assets acquired.
Costs relating to this acquisition are expensed in the Income
Statement in accordance with IFRS3 and are identified in note 3 non
underlying items.
Goodwill is attributable to the future economic benefits arising
from assets which are not capable of being individually identified
and separately recognised, these include value of the assembled
workforce within the business acquired.
8. Impact of IFRS 16 - Accounting for leases
IFRS 16 "Leases" will be adopted by the Group on 1 October 2019
for the financial year ending 30 September 2020. IFRS 16 will
primarily change lease accounting for lessees. Under the new
standard, lease agreements will give rise to the recognition of an
asset representing the right to use of the leased item and an
obligation for future lease payments. Lease costs will be
recognised in the form of depreciation of the right to use asset
and interest on the lease liability, resulting in a higher interest
expense in the earlier years of the lease term whilst the total
expense recognised in the Income Statement over the life of the
lease will be unaffected by the new standard.
From the work performed to date, it is anticipated that
implementation of the new standard will not have an impact on
overall net assets but will have an impact on the reported assets
and liabilities of the Group and will have an immaterial impact on
future Profit Before Tax and Earnings Per Share.
IFRS 16 will not have any impact on the underlying commercial
terms of each lease and will not have any impact on the commercial
performance of the Group, nor the cash flow generated in the
year.
Directors and Advisers
Company Number Solicitors
04457287 Charles Russell Speechlys
Registered Office 5 Fleet Place
5(th) Floor, Metropolitan House London EC4M 7RD
3 Darkes Lane Ashurst LLP
Potters Bar Broadwalk House
Herts EN6 1AG 5 Appold Street
London EC2A 2HA
Registrars
Link Asset Services
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
West Yorkshire HD8 0GA
Auditor
Grant Thornton UK LLP
Victoria House
4(th) Floor
199 Avebury Boulevard
Milton Keynes
MK9 1AU
Directors (Executive Chairman)
Farouq Sheikh (Chief Executive Officer)
Haroon Sheikh (Interim Group Finance
Gareth Dufton Director)
Mike Adams (Care Partnerships Director)
Karl Monaghan (Non-Executive Director)
Jamie Cumming (Non-Executive Director)
Moira Livingston (Non-Executive Director)
Company Secretary
Gareth Dufton
Nominated Adviser and Joint Broker
Panmure Gordon (UK) Limited
One New Change
London EC4M 9AF
Joint Brokers
WH Ireland
24 Martin Lane
London EC4R 0DR
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR CKCDKKBKBPAD
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