Caretech (CTH) has streamlined itself into four divisions and that's providing a "solid platform for growth", according to executive chairman Farouq Sheikh. Indeed, underlying half-year pre-tax profit at the social and residential care provider rose 12 per cent year on year to £8.5m.
But Caretech has now added a fifth division in the form of learning skills business EQL Solutions. It bought that from Elmfield Training after it fell into administration and Mr Sheikh said he was "well aware" that the business would need special attention. But five months in and it's already generated an extra £4m in sales, with conservative estimates of £9m expected by the year-end.
Operationally, the adult learning disability division performed well and the profit margin there rose 470 basis points to 27.3 per cent. But foster care suffered an 11 per cent drop in revenue to £6.6m due to the closure of the family assessment centre in Reading and a cut in capacity. The flotation of larger rival Cambian (CMBN) in April, meanwhile, doesn't worry Mr Sheikh. Cambian has been around since 2004 and doesn't represent a new competitive threat.
Broker WH Ireland expects full-year pre-tax profit of £20.7m, giving EPS of 31.8p (from £17.5m and 27.4p in 2013).
CARETECH (CTH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 262p | MARKET VALUE: | £136m | |
| TOUCH: | 260-263p | 12-MONTH HIGH: | 262p | LOW: 159p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 5 | |
| NET ASSET VALUE: | 198p* | NET DEBT: | 160% | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 56.6 | 3.4 | 6.0 | 2.32 |
| 2014 | 61.5 | 5.6 | 8.5 | 2.6 |
| % change | +9 | +65 | +42 | +12 |
Ex-div: 11 Nov Payment: 28 Nov *Includes intangible assets of £67.2m, or 129p a share | ||||
