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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Cambian Group | LSE:CMBN | London | Ordinary Share | GB00BKXNB024 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 192.40 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMCMBN
RNS Number : 3320D
Cambian Group PLC
26 April 2017
26 April 2017
Cambian Group plc
Audited results for the year ended 31 December 2016
Key financials 2016 2015 --------------------------------------- ----------- ----------- Revenue GBP182.1m GBP160.7m Adjusted EBITDA (1) GBP16.2m GBP18.4m Adjusted EBITDA margin 9% 11% Operating (loss)/profit before GBP(0.2)m GBP2.0m exceptional items (2) Operating loss GBP(7.6)m GBP(2.0)m (Loss)/profit before tax, exceptional (GBP0.4)m GBP1.9m and extinguished items (2) Loss before tax GBP(37.4)m GBP(10.7)m Profit from discontinued operations GBP155.0m GBP4.9m Adjusted earnings per share from continuing operations (3) 2.4p 1.8p Loss per share from continuing operations (17.2)p (8.1)p --------------------------------------- ----------- -----------
1 Adjusted EBITDA is earnings from continuing operations before net finance costs, tax, depreciation, amortisation, profit or loss on disposal of assets, merger and acquisition costs, IPO share option charges and exceptional items (note 3).
2 Exceptional items (note 5) and extinguished items (note 7) have been provided in order to present the results more fairly.
3 Adjusted earnings per share from continuing operations is earnings per share from continuing operations before amortisation, merger and acquisition costs, IPO share option charges, exceptional and extinguished items, net of their tax effect (note 10).
Highlights
-- Disposal of Adult Services for a premium price of GBP379m in cash, which is reported as discontinued operations, with settlement of all bank debt.
-- Focus on Children's Services which is reported as continuing operations. -- Revenue increased by 13% to GBP182.1m (2015: GBP160.7m) from increased occupancy.
-- Average occupancy increased by 11% to 1,300 places (2015: 1,169 places), with average utilisation increasing to 74% (2015: 72%), while closing capacity remained flat at 1,744 places (2015: 1,762 places).
-- Adjusted EBITDA of GBP16.2m (2015: GBP18.4m) reflecting increased revenue offset by extended negotiations on fee increases, provision for sleep-ins and repositioning of some services.
-- High quality regulatory ratings maintained, with 83% of facilities rated as "Good" or "Outstanding" at 31 December 2016 (31 December 2015: 83%).
-- Strong balance sheet, with net cash of GBP116.1m before the return of capital. -- Return of capital increased from GBP40m to GBP50m.
Christopher Kemball, Chairman, commented:
"The sale of the Adult Services business will allow the Cambian Group to focus on being a market leading provider of specialist children's services, where the Board sees significant opportunities for margin improvement and growth."
Enquiries:
Cambian Group plc +44 Instinctif Partners +44 (0)20 8735 6150 (0)20 7457 2020 Saleem Asaria, Chief Executive Mark Garraway Officer Martin Hopcroft, Chief James Gray Financial Officer
A results presentation will be held for analysts at 9.30am today at the offices of Numis Securities, The London Stock Exchange Building, 10 Paternoster Square, London, EC4M 7LT. If you would like to attend, please confirm your attendance to james.gray@instinctif.com
For those unable to attend, there will also be a conference call at 9.30am. The presentation to be given by management will be made available ahead of time at: http://www.cambiangroup.com/cambiangroup/investor/home.aspx
A replay function will be available for up to two weeks after the presentation.
Conference Call: Conference ID 14335161 UK FreeCall Dial-In 0800 953 1289 Std International +44 (0)203 009 Dial-In 5710 Conference Call Replay: Conference ID 14335161 UK FreeCall 0800 953 1533 +44 (0)145 255 Std International 0000
Chairman's Statement
As set out in last year's Annual Report, we have undertaken significant remedial action to rectify the issues of the previous year. Under our Chief Executive Officer, Saleem Asaria, and Chief Financial Officer, Martin Hopcroft, we have implemented improvements in our financial processes and systems, including cost control, and we are managing the business on a much tighter basis. We are continuing to focus on further improving our systems and we have continued to invest in our HR function and the recruitment and training of staff.
Financial results
We are commenting on both Children's Services and Adult Services on a combined basis, as we completed the sale of the latter on 28 December 2016. On a combined basis, revenue increased by 12% to GBP324.1 million (2015: GBP290.1 million), while Adjusted EBITDA of GBP45.0 million was an increase of 6% over the prior year's number of GBP42.5 million.
On a statutory basis where Adult Services are treated as discontinued operations, we are reporting that revenue in Children's Services increased by 13% to GBP182.1 million (2015: GBP160.7 million), while Adjusted EBITDA was GBP16.2 million (2015: GBP18.4 million). Operating loss before exceptional items was GBP0.2 million (2015: GBP1.9 million profit), while operating loss was GBP7.6 million (2015: GBP2.0 million). Adjusted earnings per share from continuing operations was 2.4 pence (2015: 1.8 pence), while loss per share from continuing operations was 17.2 pence (2015: 8.1 pence). The Group's closing capacity in Children's Services has remained flat at 1,744 places with average utilisation of 74% (2015: 72%).
Sale of Adult Services
On 5 December 2016, after a competitive process, we announced the sale of the Adult Services business for consideration of GBP379 million to a subsidiary of Universal Health Services, Inc. which is a major NYSE listed acute care and behavioural health services provider. The transaction, which was not conditional on approval by the Competition and Markets Authority, completed on 28 December 2016.
As part of the transaction, we have entered into a transitional services agreement with a term of not less than six months and not more than nine months. On an agreed compensation basis, Cambian will provide specific services relating to IT, finance, procurement and estates to ensure a smooth transition of the services and the patients for which it cares.
Repayment of bank debt
The net cash inflow after transaction costs of GBP374 million from the sale of the Adult Services business was used to repay the whole of the outstanding bank debt, which amounted to GBP286 million, on completion of the sale. The Group had net cash of GBP116 million on 31 December 2016.
Return of capital
Further to our announcement on 5 December 2016, the Group now intends to increase the return of capital to shareholders from GBP40 million to GBP50 million from the net proceeds of the disposal. Having taken advice and consulted with major shareholders, the Board has determined that the best way of effecting the return of capital is by way of a special dividend. This is still subject to a number of conditions, including creation of sufficient distributable reserves and final Board approval, which is expected to be announced by the end of the first half of 2017 and paid thereafter.
The net cash balances of the Group after implementing the return of capital will be used to invest in and grow our Children's Services business.
Future dividend policy
The Board intends to resume its progressive dividend policy this year and expects to pay an interim dividend for the first six months of the financial year, the amount of which will be determined by the performance of the business during this period. The interim dividend will be declared with the interim results announcement.
Senior management changes
On 28 December 2016, we appointed Anne Marie Carrie as Chief Operating Officer and a member of the Board. Anne Marie has run the Children's Services division for the last two years. She has extensive experience in the care services sector, having been previously Chief Executive Officer of Barnardo's (the UK's largest children's charity) and director of children's services at The Royal Borough of Kensington and Chelsea.
We are also delighted that, as announced on 15 February 2017, Anoop Kang will be joining as Chief Financial Officer in July 2017. Anoop was previously Group Financial Controller at Kier Group plc and, prior to that, held senior financial positions in the construction industry. He is a qualified ACA and graduate of Birmingham University. Anoop has very relevant experience in the improvement of financial systems and processes, investor relations and M&A.
Our current Chief Financial Officer, Martin Hopcroft, will provide a handover to his successor. Martin joined us in late 2015 and has been instrumental in reaching a negotiated settlement with our lending banks and in significantly improving our financial systems and controls. He leaves to pursue his independent career with the best wishes and thanks of the Board and management for an excellent job done.
Other Board changes
As previously announced, Alison Halsey, Chair of the Audit and Risk Committee, and Christopher Brinsmead, Senior Independent Director and Chair of the Remuneration Committee, have indicated their wish to step down from the Board at the conclusion of the Company's Annual General Meeting which will be held on 5 June 2017. On behalf of the entire Board and staff of Cambian, I would like to thank them for their unstinting support and commitment.
As disclosed in the Class 1 circular relating to the sale of the Adult division published on 9 December 2016, we have decided to establish a separate Quality & Safeguarding Committee which is chaired by Dr Graham Rich. Graham is currently a senior adviser to Boston Consulting Group, having previously been its director of health services. He is a qualified doctor and has held senior positions in the National Health Service, including Chief Executive and Chief Operating Officer of two healthcare organisations. The quality of our care for children and young people is paramount and the establishment of this committee provides additional oversight and control of our systems and processes.
At the same time, Mike Butterworth was appointed chair of the Audit Committee. Mike is an experienced public company financial executive, having been Chief Financial Officer of Cookson Group plc from 2005 to 2013, and is now a non-executive director of several publicly listed companies. I am sure that he will be a good mentor for our new Chief Financial Officer, while ensuring rigorous oversight of our financial team and risk management.
Future strategy and outlook
Cambian is now a pure children's behavioural services and specialist education business, offering a full range of essential services from therapeutic fostering through to specialist schools and residential care, covering autism, mental health, and sexual abuse and exploitation. As at the end of 2016, we managed 224 facilities and employed over 4,400 staff, looking after 1,270 children and young people.
We are currently one of the largest specialist children's services providers, and we operate in a highly fragmented market. Our Board believes that we have a significant opportunity to grow the business through a combination of organic growth and prudent bolt-on acquisitions. In addition to our cash balances, we have secured, subject to documentation, a medium-term revolving credit facility of GBP30m to support our measured growth plans, and the Board's current intention is that, in the medium term, net debt will not exceed 1.5 times Adjusted EBITDA.
The year has started overall in line with the Board's expectations as we continue to grow our occupancy levels. Our focus will be on managing the transitional services agreement, continuing to build out our existing portfolio, further improving our financial systems and processes, and rightsizing our cost base, bearing in mind that we are contractually bound under the transitional services agreement to continue to provide specified services until at least the middle of the year.
Our staff
We have continued to make improvements in our pay scales and career training and qualifications for our staff, taking in to account the phased introduction of the Government's National Living Wage. We have managed to recover the increased cost of our overall wages bill through selective price increases.
As always, our aim of achieving the best possible outcomes for the children and young people placed in our care depends on the skill and dedication of our staff. The Board thanks all our staff for their hard work and tremendous dedication to those placed in our care throughout the year.
Christopher Kemball
Chairman
Chief Executive Officer's Report
Overview
We began 2016 with a clear agenda: continue to implement our remedial action programme; meet our obligations under the amended bank facilities; and deliver the highest quality specialist services our customers demand.
I am pleased to report that we made significant progress across all three objectives.
-- Following the disposal of the Adult Services division at the end of the year for consideration of GBP379 million, we were able to pay down fully the Group's bank debt and announce the intention to return capital to shareholders.
-- Our remedial actions have delivered improvements across our systems and the business is now managed more rigorously, in particular on cost control. Ongoing remedial work, especially with our management information systems, will remain a priority during 2017.
-- Our focus on delivering higher severity services and to the highest quality to meet our customer's demands saw occupancy increase across our existing capacity.
Business Performance
Following the disposal of the Adult Services business at the end of the year, these results will be the last time we report on the combined Children's Services and Adult Services businesses.
On a combined basis, revenue increased by 12% to GBP324.1 million (2015: GBP290.1 million). Adjusted EBITDA increased by 6% to GBP45.0 million (2015: GBP42.5 million), giving an Adjusted EBITDA margin of 14% (2015: 15%). Operating profit was GBP3.3 million (2015: GBP7.6 million loss). After the profit on sale of discontinued operations, earnings per share from continuing and discontinued operations was 68.4 pence (2015: 5.4 pence loss).
On a combined basis, the Group's average utilisation was 81% (2015: 78%), while total capacity finished the year at 1,744 places (2015: 1,762 places) after the sale of the Adult Services business.
Children's Services
Revenue increased by 13% to GBP182.1 million (2015: GBP160.7 million) reflecting an increase in average capacity to 1,751 places (2015: 1,621 places) and average utilisation improved to 74% (2015: 72%). Adjusted EBITDA was GBP16.2 million (2015: GBP18.4 million) reflecting increased revenue offset by additional costs from extended negotiations on fee increases, provision for sleep-ins and repositioning of some services.
In 2015, we took the strategic decision to develop an integrated recovery model incorporating care, education and therapy focused on children and young people with the highest needs. Following a restructuring of our services in 2016, including our fostering offering, and investment in upskilling our staff capabilities, we have repositioned the majority of our services to a differentiated high severity offering.
With increasing demand for our services and closing utilisation at 73%, we see significant potential to increase occupancy levels.
Adult Services
Revenue for the period increased by 10% to GBP142.0 million (2015: GBP129.5 million). Average capacity was 1,206 places (2015: 1,208 places) while average utilisation was 92% (2015: 87%). Adjusted EBITDA was GBP28.8 million (2015: GBP24.1 million) reflecting increased revenue.
2017: a year of transition
The disposal of the Adult Services business followed a strategic review of options to pay down the Group's bank debt in full and to best position the business for the future. The review concluded that the increasing demand for specialist children's services and the shortage of specialist provision provided a major opportunity for Cambian.
The Company intends to become the market leading provider of specialist children's services where there are significant opportunities for growth, development and creation of shareholder value. It is our intention to start growing the business in a measured way through organic growth, and bolt-on acquisitions next year.
Before we can fully realise the opportunities we have identified, we have first to complete the complex separation of the Adult Services business from the Group, and we are carrying some additional overheads to meet our obligations under the transitional services agreement. Once these have been addressed, the business will have the opportunity to significantly improve margins from next year.
We will also be able to fully focus our resources on the strategic development and roll-out of the Children's Services business at a time of significant and growing demand for its critical services.
The opportunity for the Children's Services business
There is a recognised shortage of high quality specialist education and behavioural health services for children in the UK. The higher the severity of need, the more significant the shortage.
There are over 1.9 million children in the UK (approximately 16% of the total number of children in the country) with developmental disabilities of whom just under 200,000 would be classed as high severity and of which 88,000 would fall into Cambian's core target market. Cambian is one of the UK's major providers of specialist services and currently has a total capacity of 1,744 places and over 600 fostering places.
These requirements will continue to increase in the near term as advances in diagnostics and processes are likely to increase the formal identification of the number of children in need faster than the supply of additional capacity year-on-year.
Our vision is clear and deliverable: to become the highest quality provider of specialist education and behavioural health services for children. To this end, last year we took the strategic decision to develop our Children's Services business around a differentiated integrated recovery model incorporating care, education and therapy for children with the highest needs. In addition, our continued investment and work in outcome development will enable us to demonstrate our progress and achievements to our customers.
We start from a strong market leading position. Cambian is one of the largest independent providers of residential facilities, special education schools and therapeutic fostering services for children.
We also have the right components in place to further develop our offering:
-- A well-invested estate of specialist care homes, day and residential schools, and foster families, which is unique in the UK.
-- A bespoke delivery model comprising five core elements (safety, stabilisation, education, therapeutic intervention and parenting experience) designed to take the child in care through to adulthood "with a future".
-- A high quality and highly skilled workforce led by an experienced management team.
Our focus through the transitional period will be to fill existing capacity and increase margins. Thereafter, within strict parameters including a commitment over the medium term that net debt will not exceed 1.5 times Adjusted EBITDA, we will develop the business through a combination of organic and acquisitive growth.
It is our aspiration to significantly increase the size of our business and the number of children we positively support over the next five years.
Fees
We support the phased introduction of the National Living Wage, and we continue to seek to cover the cost to Cambian of its progressive application through selective increases to service fees for all new and some existing users.
Quality and Regulatory
We are committed to providing the highest quality behavioural health services for children. The quality of our care for children and young people is paramount.
Meanwhile, the sector continues to see an increasingly stringent regulatory environment with an enhanced rigour of inspections, which we both welcome and are well-positioned to benefit from, in this drive to improve the focus on quality of care.
It is pleasing to report that our regulatory scores remain strong, with 83% of Children's Services rated good or outstanding with Ofsted or Care Quality Commission as at 31 December 2016, notwithstanding the continuing raising of quality standards.
We announced at the end of last year that we would establish a separate Quality & Safeguarding Committee. This is now up and running and is chaired by Dr Graham Rich, who joined the Board in 2015.
Summary and Outlook
We have an established reputation as a high-quality and valued service provider. With a well-invested estate, sound finances and improved systems, we have the opportunity to take the Group to its next stage of development as a focused and market leading Children's Services business with attractive margins and good growth prospects.
We remain confident for the medium-term outlook and the Group's longer-term potential, while in the short-term we are focused on completing the separation of the Adult Services business from the Group.
Saleem Asaria
Chief Executive Officer
Chief Financial Officer's Review
On 28 December 2016, the Group made a substantial disposal with the sale of the Adult Services business. Prior to the disposal, the Group provided specialist behavioural healthcare services to children and adults. The Group is now wholly focused on children's services. As required by accounting standards, Children's Services are reported as "continuing operations" and Adult Services are reported as "discontinued operations", however they are presented together in order to provide a fuller understanding of the overall trading performance over the last two years.
The separate results for Children's Services and Adult Services are not identical to the results previously reported because some sites were transferred internally before the sale of the Adult Services business was finalised, while central costs have been reallocated to be consistent with the new perimeter.
Capacity and Occupancy
2016 2015(3) ---------------------------------- --------- -------- Children's Services - continuing 1,751 1,621 Adult Services - discontinued 1,206 1,208 Average Capacity (1) 2,957 2,829 Children's Services - continuing 1,300 1,169 Adult Services - discontinued 1,104 1,047 Average Occupancy 2,404 2,216 Children's Services - continuing 74% 72% Adult Services - discontinued 92% 87% Average Utilisation 81% 78% ---------------------------------- --------- -------- Children's Services - continuing 1,744 1,762 Adult Services - discontinued - 1,227 Closing Capacity (1) 1,744 2,989 Children's Services - continuing 1,270 1,268 Adult Services - discontinued - 1,073 Closing Occupancy 1,270 2,341 Children's Services - continuing 73% 72% Adult Services - discontinued - 87% Closing Utilisation 73% 78% ---------------------------------- --------- -------- Average Fostering Placements (2) 642 556 ---------------------------------- --------- --------
(1) Capacity is the number of separate places registered with a regulator to accept service users.
(2) Fostering is excluded from the capacity and occupancy numbers and disclosed separately.
(3) Re-presented to reflect transfers of sites before the sale of Adult Services was finalised.
On a combined basis, average utilisation increased to 81% (2015: 78%), being 74% (2015: 72%) in continuing Children's Services and 92% (2015: 87%) in discontinued Adult Services. This reflects ongoing conversion of service user referrals, as well as planned reductions in capacity where sites have been modified to meet changing demand for services, or will be sold to fund new developments. Within Children's Services, average utilisation was 81% in Residential Care and 71% in Specialist Education, while the average fill rate was 1.39 times in Therapeutic Fostering. Closing utilisation was 73% (2015: 72%) in continuing Children's Services.
Revenue
2016 2015(2) GBPm GBPm ---------------------------------- ------- -------- Children's Services - continuing 182.1 160.7 Adult Services - discontinued 142.0 129.4 Revenue 324.1 290.1 ---------------------------------- ------- -------- Fostering Revenue (1) 30.5 26.0 ---------------------------------- ------- --------
(1) Fostering revenue is included within Children's Services, and also disclosed separately.
(2) Re-presented to reflect transfers of sites before the sale of Adult Services was finalised.
On a combined basis, revenue increased by 12% to GBP324.1 million (2015: GBP290.1 million), being an increase of 13% to GBP182.1 million (2015: GBP160.7 million) in continuing Children's Services and an increase of 10% to GBP142.0 million (2015: GBP129.4 million) in discontinued Adult Services. These reflect increased occupancy and improved fees for their respective mix of services, as well as the full year impact of previous acquisitions.
Adjusted EBITDA
2016 2015 GBPm GBPm ---------------------------------- ------ ------ Children's Services - continuing 16.2 18.4 Adult Services - discontinued 28.8 24.1 Adjusted EBITDA (1) 45.0 42.5 ---------------------------------- ------ ------ Children's Services - continuing 9% 11% Adult Services - discontinued 20% 19% Adjusted EBITDA margin 14% 15% ---------------------------------- ------ ------
1 Adjusted EBITDA is earnings from continuing operations before net finance costs, tax, depreciation, amortisation, profit or loss on disposal of assets, merger and acquisition costs, IPO share option charges and exceptional items (note 3).
On a combined basis, Adjusted EBITDA increased by 6% to GBP45.0 million (2015: GBP42.5 million), being a decrease of 12% to GBP16.2 million in continuing Children's Services and an increase of 19% to GBP28.8 million in discontinued Adult Services. These reflect increased revenue and operating efficiencies, offset by extended negotiations on fee increases, provision for sleep-ins and repositioning of some services.
Profit forecast
On 9 December 2016, the Group published a profit forecast in the circular relating to the recommended proposals for the disposal of the Adult Services business, which confirmed that Adjusted EBITDA for the financial year ending 31 December 2016 would be not less than GBP42.5 million. On a combined basis, Adjusted EBITDA of GBP45.0 million is consistent with the published profit forecast.
M&A costs
On a combined basis, M&A costs of GBPnil (2015: GBP2.3 million) represent advisory fees, stamp duty and other direct costs in respect of acquisitions completed in the previous year.
IPO share option charges
On a combined basis, the charge on IPO option plans of GBP2.2 million (2015: GBP2.3 million) arises on Continuation Option Plan shares awarded as part of the IPO, the impact of which is excluded from Adjusted EBITDA. Charges on future share-based awards are included within Adjusted EBITDA.
Exceptional items
On a combined basis, exceptional items were GBP17.1 million (2015: GBP24.9 million) relating largely to the financial restructuring and operational changes, of which GBP7.4 million (2015: GBP3.9 million) relate to one-off charges in the continuing Children's Services and GBP9.7 million (2015: GBP21.0 million) relate to one-off charges in the discontinued Adult Services business.
Operating profit/(loss)
2016 2015 GBPm GBPm ------------------------------------- ------ ------- Children's Services - continuing (0.2) 1.9 Adult Services - discontinued 20.6 15.3 Operating profit before exceptional items 20.4 17.2 Exceptional items - continuing (7.4) (3.9) Exceptional items - discontinued (9.7) (20.9) Operating profit/(loss) (1) 3.3 (7.6) ------------------------------------- ------ -------
1 Operating profit/(loss) is Adjusted EBITDA less depreciation, amortisation, profit or loss on disposal of assets, merger and acquisition costs and IPO share option charges (note 3).
On a combined basis, operating profit before exceptional items increased by 18% to GBP20.4 million (2015: GBP17.2 million), being an operating loss of GBP0.2 million (2015: GBP1.9 million profit) in continuing Children's Services and an operating profit of GBP20.6 million (2015: GBP15.3 million) in discontinued Adult Services, which reflect the benefits of the operational efficiencies and the remediation programme.
After exceptional items, the combined operating profit was GBP3.3 million (2015: GBP7.6 million loss), being an operating loss of GBP7.6 million (2015: GBP2.0 million) in continuing Children's Services and an operating profit of GBP10.9 million (2015: GBP5.6 million loss) in discontinued Adult Services.
Finance charges
On a combined basis, net finance charges increased to GBP29.8 million (2015: GBP8.8 million), which reflect eight months at the new funding rates as a result of the financial restructuring in April 2016, of which GBP29.8 million (2015: GBP8.7 million) relate to continuing Children's Services and GBPnil million (2015: GBP0.1 million) relate to discontinued Adult Services.
Extinguished items
All bank debt was settled on sale of the Adult Services business, so all costs of the financing facilities are reported as extinguished items within continuing operations.
Taxation
On a combined basis, there is a tax credit of GBP6.1 million (2015: GBP6.8 million), being a tax credit of GBP6.2 million (2015: GBP3.8 million charge) in continuing Children's Services and a tax charge of GBP0.1 million (2015: GBP10.6 million credit) in discontinued Adult Services. The difference between the current statutory rate and the effective tax rate is principally due to non-deductible expenditure and non-qualifying depreciation.
Earnings per share
Adjusted earnings per share from continuing operations was 2.4 pence (2015: 1.8 pence). After the profit on sale of discontinued operations, earnings per share from continuing and discontinued operations was 68.4 pence (2015: 5.4 pence loss).
Discontinued operations
On 5 December 2016, the Group entered into an agreement to sell Cambian Healthcare Limited and its subsidiaries, Care Aspirations Developments Limited and its subsidiaries, and Cambian Care Services Limited ("Adult Services"). The disposal was effected to allow the Group to focus on being a market leading provider of Children's Services, where the Board sees significant opportunities for growth, development and shareholder value. The disposal was completed on 28 December 2016, on which date control of Adult Services passed to the acquirer.
2016 2015 GBPm GBPm --------------------------------------- -------- ---------- Profit/(loss) before tax 10.8 (5.7) Tax (0.1) 10.6 Profit from discontinued operations 10.7 4.9 Profit on sale of discontinued 144.3 - operations Profit for the year from discontinued operations 155.0 4.9 --------------------------------------- -------- ----------
Post-completion transfer sites
At completion, it had not been possible to complete the transfer of all business contracts for a small number of sites between continuing Children's Services and discontinued Adult Services, as the requisite regulatory approval had not been received. Mechanics are agreed to govern this situation, which will not materially change the economics, although they may impact some reported figures until finalised.
Migration of services
The process of separating the Adult Services business involves the complex separation of significant business systems and support services. The time and resource to achieve this, together with the continuing maturing of occupancy, may result in a positive split of trading performance in 2017.
Capital expenditure
For continuing and discontinued operations, capital expenditure was GBP12.5 million in the year, of which GBP6.4 million was spent on continuing operations with GBP4.5 million on development of new capacity and GBP1.9 million on the maintenance of existing units. Going forward, capital expenditure in the continuing Children's Services will moderately increase given the new capital structure and strategy, together with investment in systems.
Cash flow
For continuing operations, net cash from operating activities was an inflow of GBP3.4 million (2015: GBP15.4 million), with working capital movements reflecting the growth in activity together with extended negotiations on fee increases. With the disposal proceeds from the sale of Adult Services and the financing costs of the amended bank facilities, but before payment of all transaction related costs, net cash was GBP116.1 million (2015: GBP239.3 million net debt). In view of the timing of the sale of Adult Services, some transaction related costs were settled after the year end.
Debt facilities
On 18 May 2016, the Group entered into an amended GBP290 million financing facilities agreement, the principal provisions of which were increased margins, additional fees, amended covenants and information undertakings, as well as restrictions on dividends and capital expenditure. With completion of the sale of Adult Services on 28 December 2016, bank facilities and swap contracts were settled in full.
The Group has agreed, subject to documentation, a new medium-term GBP30 million revolving credit facility for general corporate purposes with a margin of 2% over LIBOR on amounts drawn under the facility, together with customary fees, covenants, baskets and undertakings.
Martin Hopcroft
Chief Financial Officer
Statement of Directors' Responsibilities
The following statement will be contained in the Annual Report and Accounts 2016.
Each of the directors, whose names and functions are listed in the annual report for the year ended 31 December 2016 confirm that, to the best of their knowledge:
-- the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the company's performance, business model and strategy;
-- the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and loss of the Company and the undertakings included in the consolidation taken as a whole; and
-- the Directors' Report includes a fair review of the development and performance of the business and the position of the Company and its subsidiary undertakings, together with a description of the principal risks and uncertainties that they face.
By order of the Board
Saleem Asaria Martin Hopcroft Chief Executive Officer Chief Financial Officer
Cautionary Statement
Certain statements in this preliminary announcement are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. Because these statements contain risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. We undertake no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
Principal Risks and Uncertainties
Risk Description ----------------------- ---------------------------------------------- Quality of service Failure to provide a high quality and consistent level of care for the children and adults placed under our charge. ----------------------- ---------------------------------------------- Regulatory breach Loss or suspension of operating licenses due to a major statutory, regulatory or contractual compliance breach. ----------------------- ---------------------------------------------- Service innovation Insufficient innovation in our business model, service offerings or model of care reduces our competitiveness in the market. ----------------------- ---------------------------------------------- Incident response Inability to effectively react and respond to a major and/or systematic incidents in a timely and controlled manner. ----------------------- ---------------------------------------------- Relationships Failure to create and maintain strong relationships with commissioners to ensure referrals and conversions at appropriate prices. ----------------------- ---------------------------------------------- Systems & processes Immaturity of financial and operational systems and processes prevent effective business operations and sustainable future growth. ----------------------- ---------------------------------------------- Attraction & Failure to attract and maintain retention an effective, high quality resource and talent base may prevent the delivery of high quality services to the service users. Reduction in size and diversification of the group following the disposal of the Adult Services business
may make it more difficult to attract and retain key employees. Potential adverse impact on recruitment in the healthcare industry as a result of Brexit. ----------------------- ---------------------------------------------- Strategy & performance Failure to develop, execute and operate a strategic plan that ensures continued viable growth. ----------------------- ---------------------------------------------- Integration Failure to realise the benefits and synergies of effectively integrating new sites and acquisitions. ----------------------- ---------------------------------------------- Business change Failure to effectively deliver key business change programmes to improve controls and processes. ----------------------- ---------------------------------------------- Government action Failure to anticipate or respond to changes in government policy or regulation. ----------------------- ---------------------------------------------- National living Additional costs of national living wage wage on "sleep-ins" could be material. ----------------------- ---------------------------------------------- Separation of Separation of the Adult Services services business will be complex and could result in unexpected costs. ----------------------- ---------------------------------------------- Warranties & Customary warranties and indemnities indemnities to the buyer of the Adult Services business could result in a material liability and/or adverse effect. ----------------------- ----------------------------------------------
Consolidated Income Statement
For the year ended 31 December 2016
2016 2015 GBP'000 GBP'000 Revenue 182,055 160,660 Cost of sales (120,741) (98,878) ---------- --------- Gross profit 61,314 61,782 Administrative expenses (68,937) (63,752) ---------- --------- Operating loss (7,623) (1,970) Operating (loss)/profit before exceptional items (228) 1,961 Exceptional items within administrative expenses (7,395) (3,931) ---------- --------- Operating loss (7,623) (1,970) ----------------------------------------- ---------- --------- Finance income 13 60 Finance costs (29,784) (8,754) ---------- --------- Loss before tax (37,394) (10,664) ----------------------------------------- ---------- --------- (Loss)/profit before tax, exceptional and extinguished items (401) 1,906 Exceptional items within administrative expenses (7,395) (3,931) Extinguished items within finance costs (29,598) (8,639) ---------- --------- Loss before tax (37,394) (10,664) ----------------------------------------- ---------- --------- Tax 6,217 (3,837) ---------- --------- Loss for the year from continuing operations (31,177) (14,501) Profit for the year from discontinued operations 155,003 4,863 ---------- --------- Profit/(loss) for the year (1) 123,826 (9,638) ---------- --------- Fair value loss from cash flow hedge (2) (1,752) (1,133) Deferred tax relating to fair value loss (2) 316 216 Recycling of cash flow hedge 2,353 - ---------- --------- Other comprehensive profit/(loss) for the year 917 (917) ---------- --------- Total comprehensive profit/(loss) for the year (1) 124,743 (10,555) ========== ========= Loss per share from continuing operations - basic & diluted (17.2)p (8.1)p
(1) Wholly attributable to owners of the ultimate controlling party.
(2) Items that may be reclassified to profit and loss.
Consolidated Balance Sheet
As at 31 December 2016
2016 2015 GBP'000 GBP'000 Goodwill 75,783 114,272 Other intangible assets 45,928 72,187 Property, plant and equipment 177,183 363,988 ---------- ---------- Non-current assets 298,894 550,447 ---------- ---------- Trade and other receivables 41,414 48,412 Cash and cash equivalents 116,657 18,047 Current tax asset 2,771 - Prepayments and accrued income 3,040 4,837 ---------- ---------- Current assets 163,882 71,296 ---------- ---------- Total assets 462,776 621,743 ---------- ---------- Trade and other payables (32,892) (37,436) Provisions (5,492) - Deferred revenue (27,314) (35,125) Obligations under finance leases (273) (248) Borrowings - (255,354) Current tax liabilities - (3,590) ---------- ---------- Current liabilities (65,971) (331,753) ---------- ---------- Net current assets/(liabilities) 97,911 (260,457) ---------- ---------- Obligation under finance leases (277) (574) Derivative financial instruments - (1,133) Deferred tax liabilities (25,221) (43,948) ---------- ---------- Non-current liabilities (25,498) (45,655) ---------- ---------- Total liabilities (91,469) (377,408) ---------- ---------- Net assets 371,307 244,335 ========== ========== Share capital 1,842 1,842 Share premium 386,653 386,653 Cash flow hedging reserve - (917) Other reserves (114,360) (116,589) Retained earnings 97,172 (26,654) ---------- ---------- Total equity 371,307 244,335 ========== ==========
Consolidated Statement of Changes in Equity
For the year ended 31 December 2016
Share Share Cash Other Retained Total capital premium flow reserves earnings equity hedging reserve GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 As at 1 January 2015 1,723 386,653 - (144,158) (12,086) 232,132 Loss for the year - - - - (9,638) (9,638) Issue of share capital 119 - - 25,305 - 25,424 Loss on effective portion of cash flow hedge, net of tax - - (917) - - (917) Credit for equity-settled share based payments - - - 2,264 - 2,264 Dividends paid - - - - (4,930) (4,930) --------- --------- --------- ---------- ---------- -------- As at 31 December 2015 1,842 386,653 (917) (116,589) (26,654) 244,335 Profit for the year - - - - 123,826 123,826 Loss on effective portion of cash flow hedge, net of tax - - (1,436) - - (1,436) Reclassification for losses included in profit and loss, net of tax - - 2,353 - - 2,353 Credit for equity-settled share
based payments - - - 2,229 - 2,229 --------- --------- --------- ---------- ---------- -------- As at 31 December 2016 1,842 386,653 - (114,360) 97,172 371,307 ========= ========= ========= ========== ========== ========
Consolidated Cash Flow Statement
For the year ended 31 December 2016
2016 2015 GBP'000 GBP'000 Net cash inflow from operating activities 3,449 15,386 Proceeds on disposal of property, plant and equipment 973 329 Purchase of property, plant and equipment (12,547) (44,329) Acquisition of subsidiaries, net of cash - (41,521) Sale of Adult Services - discontinued 373,744 - operations Net cash from/(used in) investing activities 362,170 (85,521) ---------- --------- Repayment of borrowings (275,000) - New bank loans raised, net of issue costs 10,550 39,630 Repayment of obligations under finance leases (252) (287) Proceeds on issue of shares - 25,424 Dividends paid - (4,930) Net cash (used in)/from financing activities (264,702) 59,837 ---------- --------- Net increase/(decrease) in cash & cash equivalents 100,917 (10,298) (Decrease)/increase in cash held on behalf of clients (2,307) 946 Cash and cash equivalents at beginning of year 18,047 27,399 Cash and cash equivalents at end of year 116,657 18,047 ========== =========
Notes to the financial statements
For the year ended 31 December 2016
1. Basis of Preparation
Cambian Group plc ("Company") is incorporated in Great Britain under the Companies Act. The principal activity of the Company and its subsidiaries ("Group") is the provision of specialist behavioural healthcare services.
The preliminary announcement is based on the Group's financial statements for the year ended 31 December 2016 which are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union. Whilst the financial information included in this preliminary announcement has been computed in accordance with IFRS, this announcement does not itself contain sufficient information to comply with IFRS. The accounting policies applied in preparing this financial information are consistent with the Group's financial statements for the year ended 31 December 2016.
The financial information does not constitute the Company's statutory accounts for the years ended 31 December 2016 or 2015, but is derived from those accounts. Statutory accounts for 2015 have been delivered to the Registrar of Companies and those for 2016 will be delivered following the Company's Annual General Meeting. The Auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by the way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006.
Exceptional and extinguished items reflect items of expenditure that have been disclosed separately due to their size or incidence in order to obtain clear and consistent presentation of the Group's performance.
2. Going concern
The directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for at least 12 months from the date of approval of these financial statements. Accordingly, they have adopted the going concern basis of accounting in preparing the financial statements.
3. Segmental analysis
On 28 December 2016, the Group made a substantial disposal with the sale of the Adult Services business. As required by accounting standards, Children's Services are reported as "continuing operations" and Adult Services are reported as "discontinued operations", however they are presented together in order to provide a fuller understanding of the overall trading performance over the last two years.
Performance is measured by Adjusted EBITDA, which is defined as earnings from continuing operations before net finance costs, tax, depreciation, amortisation, profit or loss on disposal of assets, merger and acquisition costs, IPO share option charges and exceptional items.
Notes to the financial statements
For the year ended 31 December 2016
3. Segmental analysis (continued)
Continuing Discontinued 2016 GBP'000 GBP'000 GBP'000 Revenue 182,055 142,086 324,141 Cost of sales (120,741) (86,883) (207,624) ----------- ------------- ---------- Gross profit 61,314 55,203 116,517 Administrative expenses before adjustments (45,087) (26,444) (71,531) ----------- ------------- ---------- Adjusted EBITDA 16,227 28,759 44,986 Depreciation (9,831) (6,647) (16,478) Amortisation (4,263) (1,505) (5,768) Loss on disposal of property, plant and equipment (131) 8 (123) Merger and acquisition costs - - - IPO share option charges (2,230) - (2,230) ----------- ------------- ---------- Operating (loss)/profit before exceptional items (228) 20,615 20,387 Exceptional items (7,395) (9,740) (17,135) ----------- ------------- ---------- Operating (loss)/profit (7,623) 10,875 3,252 Finance income 13 1 14 Finance costs (29,784) (46) (29,830) ----------- ------------- ---------- (Loss)/profit before tax (37,394) 10,830 (26,564) Tax 6,217 (105) 6,112 ----------- ------------- ---------- (Loss)/profit before sale of discontinued operations (31,177) 10,725 (20,452) Profit on sale of discontinued operations - 144,278 144,278 ----------- ------------- ---------- (Loss)/profit for the year (31,177) 155,003 123,826 =========== ============= ========== Continuing Discontinued 2015 GBP'000 GBP'000 GBP'000 Revenue 160,660 129,458 290,118 Cost of sales (99,878) (79,774) (179,652) ----------- ------------- ---------- Gross profit 60,782 49,684 110,466 Administrative expenses before adjustments (42,393) (25,541) (67,934) ----------- ------------- ---------- Adjusted EBITDA 18,389 24,143 42,532 Depreciation (8,065) (6,995) (15,060) Amortisation (3,857) (1,551) (5,408) Loss on disposal of property, plant and equipment (181) (139) (320) Merger and acquisition costs (2,061) (195) (2,256) IPO share option charges (2,264) - (2,264) ----------- ------------- ---------- Operating profit before exceptional items 1,961 15,263 17,224 Exceptional items (3,931) (20,930) (24,861) ----------- ------------- ---------- Operating loss (1,970) (5,667) (7,637) Finance income 60 17 77 Finance costs (8,754) (99) (8,853) ----------- ------------- ---------- Loss before tax (10,664) (5,749) (16,413) Tax (3,837) 10,612 6,775 ----------- ------------- ---------- (Loss)/profit before sale of discontinued operations (14,501) 4,863 (9,638) Profit on sale of discontinued - - - operations ----------- ------------- ---------- (Loss)/profit for the year (14,501) 4,863 (9,638) =========== ============= ==========
Notes to the financial statements
For the year ended 31 December 2016
3. Segmental analysis (continued)
Continuing Discontinued 2015 GBP'000 GBP'000 GBP'000 Revenue - as previously reported 169,070 121,048 290,118 Reallocated (8,410) 8,410 - ----------- ------------- -------- Revenue - re-presented 160,660 129,458 290,118 =========== ============= ======== Adjusted EBITDA - as previously reported 17,569 24,963 42,532 Reallocated 820 (820) - ----------- ------------- -------- Adjusted EBITDA - re-presented 18,389 24,143 42,532 =========== ============= ========
The allocation of revenue and costs between Children's Services and Adult Services in 2015 has been re-presented to reflect continuing and discontinued operations, as some sites were transferred for the purposes of the sale of the Adult Services business, while central costs have been reallocated to be consistent with the new perimeter.
4. Staff costs
Continuing Discontinued 2016 GBP'000 GBP'000 GBP'000 Wages and salaries 95,231 77,901 173,132 Social security costs 7,814 5,632 13,446 Other pension costs 1,252 527 1,779 Share-based payments 2,229 - 2,229 Staff costs 106,526 84,060 190,586 =========== ============= ======== Continuing Discontinued 2015 GBP'000 GBP'000 GBP'000 Wages and salaries 81,074 74,497 155,571 Social security costs 6,654 6,045 12,699 Other pension costs 878 726 1,604 Share-based payments 2,264 - 2,264 Staff costs 90,870 81,268 172,138 =========== ============= ======== Continuing Discontinued 2016 Nursing, care and support staff 3,880 2,481 6,361 Estates, sales, quality and administration 537 343 880 Average number of employees & directors 4,417 2,824 7,241 =========== ============= ====== Continuing Discontinued 2015 Nursing, care and support staff 3,690 2,519 6,209 Estates, sales, quality and administration 511 348 859 Average number of employees & directors 4,201 2,867 7,068 =========== ============= ======
Notes to the financial statements
For the year ended 31 December 2016
5. Exceptional items
Continuing Discontinued 2016 GBP'000 GBP'000 GBP'000 Refinancing costs 2,446 - 2,446 Sleep-ins 1,922 171 2,093 Capitalised finance costs written off 1,854 - 1,854 Redundancy costs 1,041 - 1,041 IT project costs written off 132 - 132 Costs on sale of Adult Services - 9,569 9,569 Exceptional items 7,395 9,740 17,135 =========== ============= ======== Continuing Discontinued 2015 GBP'000 GBP'000 GBP'000 IT project costs written off 2,757 - 2,757 Impairment of property, plant and equipment 800 20,930 21,730 Redundancy costs 285 - 285 Business integration 155 - 155 Gain on acquisition (66) - (66) ----------- ------------- -------- Exceptional items 3,931 20,930 24,861 =========== ============= ========
Refinancing costs include specialists to assist in the financial restructuring. Sleep-ins is the provision for 2015 and prior years relating to the potential impact of the National Minimum Wage. Capitalised finance costs written off relate to the previously capitalised finance fees prior to the financial restructuring. Redundancy costs relate to senior management who were made redundant in late 2015 and early 2016. IT project costs written off relate to the decision in late 2015 to cancel a systems project. Costs on sale of Adult Services relate to specialists to facilitate the sale.
6. Finance costs
Continuing Discontinued 2016 GBP'000 GBP'000 GBP'000 Interest on bank loans 19,280 - 19,280 Amortised loan issue costs 8,160 - 8,160 Settlement costs of financial instruments 2,158 - 2,158 Bank charges 135 46 181 Interest on obligations under finance leases 51 - 51 Finance costs 29,784 46 29,830 =========== ============= ======== Continuing Discontinued 2015 GBP'000 GBP'000 GBP'000 Interest on bank loans 8,033 - 8,033 Amortised loan issue costs 606 - 606 Settlement costs of financial - - - instruments Bank charges 71 99 170 Interest on obligations under finance leases 44 - 44 Finance costs 8,754 99 8,853 =========== ============= ========
Notes to the financial statements
For the year ended 31 December 2016
7. Extinguished items
Continuing Discontinued 2016 GBP'000 GBP'000 GBP'000 Interest on bank loans 19,280 - 19,280 Amortised loan issue costs 8,160 - 8,160 Settlement costs of financial instruments 2,158 - 2,158 Extinguished items 29,598 - 29,598 =========== ============= ======== Continuing Discontinued 2015 GBP'000 GBP'000 GBP'000 Interest on bank loans 8,033 - 8,033 Amortised loan issue costs 606 - 606 Settlement costs of financial - - - instruments Extinguished items 8,639 - 8,639 =========== ============= ========
All bank debt was settled on sale of the Adult Services business, so all costs of the financing facilities are reported as extinguished items within continuing operations.
8. Tax
Continuing Discontinued 2016 GBP'000 GBP'000 GBP'000 Current tax (4,762) 2,984 (1,778) Deferred tax (1,455) (2,879) (4,334) ----------- ------------- -------- Tax (credit)/charge (6,217) 105 (6,112) =========== ============= ======== Continuing Discontinued 2015 GBP'000 GBP'000 GBP'000 Current tax 777 2,677 3,454 Deferred tax 3,060 (13,289) (10,229) ----------- ------------- --------- Tax charge/(credit) 3,837 (10,612) (6,775) =========== ============= =========
Corporation tax is calculated at 20.0% (2015: 20.3%) of the estimated taxable profit. Most of the exceptional costs are capital in nature and therefore not tax deductible, and it is estimated that GBP8.2m (2015: GBP2.5m) of the exceptional costs will be deductible, which has reduced the tax charge by GBP1.6m (2015: GBP0.5m).
Notes to the financial statements
For the year ended 31 December 2016
9. Sale of discontinued operations
2016 2015 GBP'000 GBP'000 Total consideration 383,026 - Directly attributable costs (3,999) - ---------- -------- Consideration 379,027 - Cash and cash equivalents (5,284) - ---------- -------- Net cash inflow on sale of discontinued 373,743 - operations ========== ======== Goodwill (38,489) - Other intangible assets (20,491) - Property, plant and equipment (181,784) - Trade and other receivables (31,207) - Cash and cash equivalents (5,284) - Prepayments and accrued income (1,873) - Trade and other payables 17,453 - Deferred revenue 11,083 - Current tax liabilities 1,234 - Deferred tax liabilities 14,609 - Net assets (234,749) - Consideration 379,027 - ---------- -------- Profit on sale of discontinued 144,278 - operations Profit from discontinued operations 10,725 4,863 ---------- -------- Profit for the year from discontinued operations 155,003 4,863 ========== ========
10. Earnings/(loss) per share
2016 2015 pence Pence Loss per share from continuing operations (17.2) (8.1) Earnings per share from discontinued operations 85.6 2.7 ------- ------ Earnings/(loss) per share - basic & diluted 68.4 (5.4) ======= ====== Loss per share from continuing operations (17.2) (8.1) Amortisation of intangibles 1.9 1.9 Merger and acquisition costs - 1.1 IPO share option charges 1.2 1.2 Exceptional items 3.5 1.9 Extinguished items 13.0 3.8 ------- ------ Adjusted earnings per share - basic & diluted 2.4 1.8 ======= ======
Basic and diluted earnings/(loss) per share is based on the weighted average of 180,977,198 (2015: 177,827,244) ordinary shares in issue during the period and the profit attributable to the equity holders of GBP123.8m (2015: GBP9.6m loss).
Notes to the financial statements
For the year ended 31 December 2016
11. Goodwill
2016 2015 GBP'000 GBP'000 Cost As at 1 January 114,591 100,268 Recognised on acquisition of a subsidiary - 14,323 Disposals (38,489) - --------- -------- As at 31 December 76,102 114,591 --------- -------- Impairment As at 1 January (319) (319) Charge for the year - - --------- -------- As at 31 December (319) (319) --------- -------- Net book value As at 31 December 75,783 114,272 ========= ========
12. Other intangible assets
Customer Non-compete Total Relationships Agreements GBP'000 GBP'000 GBP'000 Cost As at 1 January 2015 55,353 641 55,994 Recognised on acquisition of subsidiaries 28,450 40 28,490 --------------- ------------ --------- As at 31 December 2015 83,803 681 84,484 Disposals (23,504) (340) (23,844) --------------- ------------ --------- As at 31 December 2016 60,299 341 60,640 --------------- ------------ --------- Amortisation As at 1 January 2015 (6,702) (187) (6,889) Charge for the year (5,372) (36) (5,408) --------------- ------------ --------- As at 31 December 2015 (12,074) (223) (12,297) Charge for the year (5,586) (182) (5,768) Disposals 3,013 340 3,353 --------------- ------------ --------- As at 31 December 2016 (14,647) (65) (14,712) --------------- ------------ --------- Net book value As at 31 December 2015 71,729 458 72,187 =============== ============ ========= As at 31 December 2016 45,652 276 45,928 =============== ============ =========
Notes to the financial statements
For the year ended 31 December 2016
13. Property, plant and equipment
Land Fixture, Motor Assets Total and fittings vehicles under buildings and construction equipment GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Cost As at 1 January 2015 366,349 30,017 1,697 17,732 415,795 Additions 28,236 13,653 - 2,440 44,329 Acquisition of subsidiary 4,773 517 29 - 5,319 Disposals and write offs (733) (4) (167) (2,757) (3,661) ----------- ----------- ---------- -------------- ---------- As at 31 December 2015 398,625 44,183 1,559 17,415 461,782 Additions 2,239 8,131 - 2,177 12,547 Transfers 7,459 854 - (8,313) - Disposals and write offs (488) (578) (311) (300) (1,677) Disposal of business (210,692) (18,087) (199) (4,613) (233,591) ----------- ----------- ---------- -------------- ---------- As at 31 December 2016 197,143 34,503 1,049 6,366 239,061 =========== =========== ========== ============== ========== Depreciation As at 1 January 2015 (43,975) (16,654) (473) - (61,102) Charge for the year (7,895) (6,847) (318) - (15,060) Impairment losses (21,730) - - - (21,730) Disposals 11 - 87 - 98 ----------- ----------- ---------- -------------- ---------- As at 31 December 2015 (73,589) (23,501) (704) - (97,794) Charge for the year (8,303) (8,052) (123) - (16,478) Disposal 49 340 198 - 587 Disposal of business 40,072 11,547 188 - 51,807 ----------- ----------- ---------- -------------- ---------- As at 31 December 2016 (41,771) (19,666) (441) - (61,878) =========== =========== ========== ============== ========== Net book value As at 31 December 2015 325,036 20,682 855 17,415 363,988 =========== =========== ========== ============== ========== As at 31 December 2016 155,372 14,837 608 6,366 177,183 =========== =========== ========== ============== ==========
Notes to the financial statements
For the year ended 31 December 2016
14. Provisions
2016 2015 GBP'000 GBP'000 As at 1 January - - Recognised 5,492 - -------- -------- As at 31 December 5,492 - ======== ========
Sleep-ins
The Group operates a number of sites where individuals "sleep in" overnight and are paid an allowance for so doing. It is the Group's view that this practice is not in breach of the National Minimum Wage Act 1998 or the National Minimum Wage Regulations 2015 (as amended and in force). Following the decision in Whittlestone v BJP Home Support Limited [2013] UKEAT, HMRC has made enquiries of Cambian and, the Board believes, other care service providers, regarding payments for individuals who are engaged in a "sleep in". HMRC's enquiries are at a preliminary stage and it is, therefore, not possible to say when HMRC may conclude their enquiries in this area nor what the result of those enquiries may be. The directors have used their judgement to make a provision for this. If it is ultimately judicially determined that Cambian had to pay each individual engaged in a "sleep in" an amount calculated by reference to the National Living Wage, the additional cost could be material. The amount has not been separately disclosed to avoid commercially prejudicing the issue.
Onerous contracts
The Company is party to an exclusive supply agreement in respect of pharmaceutical supplies. This contract did not automatically transfer with the sale of Adult Services. The supplier has indicated that the sale is in breach of the agreement and is seeking either a novation of the agreement or compensation. The directors have used their judgement to make a provision for this. The amount has not been separately disclosed to avoid commercially prejudicing the issue.
15. Share capital
Ordinary shares 2016 2015 2016 2015 of 1p each Issued and fully Number Number GBP'000 GBP'000 paid As at 1 January 184,198,746 172,335,110 1,842 1,723 Allotted during the year - 11,863,636 - 119 ------------ ------------ -------- -------- As at 31 December 184,198,746 184,198,746 1,842 1,842 ============ ============ ======== ========
Notes to the financial statements
For the year ended 31 December 2016
16. Net cash from operating activities
2016 2015 GBP'000 GBP'000 Loss for the year from continuing operations (37,394) (10,664) Profit for the year from discontinued operations 10,725 4,863 Tax charge/(credit) on sale of discontinued operations 105 (10,612) Finance costs 29,830 8,853 Finance income (14) (77) Loss on impairment of property, plant and equipment - 21,730 Loss on disposal of property, plant and equipment 123 3,077 Amortisation of intangible assets 5,768 5,408 Depreciation of property, plant and equipment 16,478 15,060 Other non-cash items 4,083 2,264 --------- --------- Operating cash flows before movements in working capital 29,704 39,902 Increase in receivables (24,712) (17,605) Increase in payables 24,170 9,229 --------- --------- Net cash inflow before interest and tax 29,162 31,526 Interest paid (22,356) (7,864) Tax paid (3,357) (8,276) Net cash inflow from operating activities 3,449 15,386 ========= =========
17. Net cash/(debt)
2016 2015 GBP'000 GBP'000 Cash and bank balances 115,871 14,954 Cash held on behalf of clients 786 3,093 -------- ---------- Cash and cash equivalents 116,657 18,047 Borrowings - (257,417) Unamortised issue costs - 2,063 Derivative financial instruments - (1,133) Amounts due under hire purchase obligations (550) (822) -------- ---------- Net cash/(debt) 116,107 (239,262) ======== ==========
Cash and cash equivalents include cash held on behalf of clients, for which there is an equivalent liability. All interest earned is passed to clients and excluded from the Group's consolidated income statement.
This information is provided by RNS
The company news service from the London Stock Exchange
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