CareTech Holdings PLC Full Year Trading Update (6409U)

TIDMCTH

RNS Number : 6409U

CareTech Holdings PLC

26 October 2017

For immediate release 26 October 2017

CareTech Holdings PLC

("CareTech" or "the Group")

Full Year Trading Update

CareTech Holdings PLC (AIM:CTH), a pioneering provider of specialist social care services in the UK, is pleased to announce its full year trading update ahead of its results for the year ended 30 September 2017.

The Board confirms that trading during the period was in line with market expectations.

CareTech's care pathways continue to be a key foundation for delivering positive outcomes for our service users and in total we have added 248 beds in the year. During the year, a total of 161 beds in reconfigured and new services have been brought into service. These beds have a higher contribution than the beds pre-configuration and are part of an ongoing strategy to enhance fees and margins.

Approximately a third of the additional beds are a result of the Group's acquisition of Selborne Care Limited in June 2017, which has an Adult Residential capacity of 57 beds and provides Adult Supported Living services to 30 service users. Selborne Care has performed in line with expectations.

The Group's net capacity at the year-end was 2,534 places (2016: 2,319 places), a net increase in capacity of 215 places. A net 33 places were removed for reconfiguration. These included 36 places in services that have been withdrawn for reconfiguration into new care models, and 3 places added in supported living.

Occupancy levels in the mature estate remain strong at 93% (2016: 93%) and the blended occupancy remains approximately 86%.

Annual fee rate negotiations with local authorities have again led to a positive outcome this year. The key to improving fee rates remains our work on reconfiguring services that we own and repositioning them for the needs of more complex service users in line with commissioner demand.

In April 2017 the National Living Wage was set at GBP7.50 an hour for all staff aged 25 and over. This new benchmark is welcome as we expect it will improve staff recruitment and retention. The change to the National Minimum Wage, for those aged under 25, affected only a minority of our staff. We are recovering the increase in cost from the appropriate Local Authorities and these negotiations are almost satisfactorily complete.

The Company has undertaken a second Sharesave Scheme for staff during the year whereby on 13 October 2017 it granted options in aggregate over 254,681 ordinary shares.

As part of our ongoing commitment to excellence in care, the management team has been further strengthened in the year and we will continue to bring senior executives into the business to drive growth and quality.

Our acquisitions undertaken over the past few years have performed ahead of expectations in part as a result of being within the wider Group. As a result of good initial returns we plan to further invest in some of these businesses.

During the year the Group purchased a number of properties for refurbishment into new services. There was a particular focus on property acquisitions and refurbishments in the year with work in progress on a number of projects that will open during 2017/18.

The CareTech Charitable Foundation was created during the year. Its objectives are to promote the education of people with special needs and those at a disadvantage and to provide relief to those with physical and mental illness by the provision of counselling and support. The focus of the foundation will be both on projects and people in the UK and throughout the world.

Net Debt reduced to GBP147.2m at the period end (30 September 2016: GBP156.9m) with the proceeds from the Placement of 11,000,000 new shares in March which raised GBP37m of net proceeds being partly spent on the acquisition of Selborne Care in June. The Group continues to work on a number of other acquisition opportunities and has a strong pipeline of projects and transactions in progress.

CareTech will announce its preliminary results in early December 2017.

Farouq Sheikh, Executive Chairman, commented:

"I am very pleased to report another successful year of trading at CareTech. During the year we continued to deliver our organic and acquisitive growth strategies and also launched some important initiatives including the CareTech Charitable Foundation and the second employee Sharesave Scheme. We enter the current financial year with strong underlying cash flow, solid organic growth and a sizeable pipeline of opportunities, which together give us confidence in continuing to deliver our exciting growth strategy."

For further information, please contact:

   CareTech Holdings PLC                                                  01707 601800 

Farouq Sheikh, Executive Chairman

Michael Hill, Group Finance Director

   Buchanan (PR Adviser)                                                  020 7466 5000 

Mark Court

Sophie Wills

Stephanie Watson

   Panmure Gordon (Nomad and Joint Broker)       020 7886 2500 

Freddy Crossley

Peter Steel

Charles Leigh-Pemberton

   WH Ireland (Joint Broker)                                            020 7220 1666 

Adrian Hadden

Jessica Cave

Alex Bond

About CareTech

CareTech Holdings plc is a leading provider of specialist social care services, supporting adults and children with a wide range of complex needs in more than 260 specialist services around the UK.

Committed to the highest standards of care and care governance, CareTech provides its innovative care pathways through five divisions covering adult learning disabilities, specialist services, young people residential services, foster care and learning services which come under the two outcome-based sectors of Adult Services and Young People Services.

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. Its property portfolio comprises more than 200 properties.

For further information please visit: www.caretech-uk.com

This information is provided by RNS

The company news service from the London Stock Exchange

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October 26, 2017 02:00 ET (06:00 GMT)