The chairman of care home operator Cambian (CMBN), Christopher Kemball, might have called this half's performance "good compared to the second half of last year", but the care home operator would have been hard-pressed to have done much worse.
Higher occupancy helped to boost revenues, while adjusted cash profits at £22m beat Canaccord forecasts by 42 per cent, although this was still down on the comparable period last year. However, it is net debt which remains the biggest worry, standing at almost 11.5 times cash profits, accompanied by a very high interest rate. Amendments to the banking facilities relieved the group of the immediate risk of breaching covenants, but came at a price - finance costs rocketed to £7.3m. Plus, Cambian must now repay £120m by April or encounter a fee of £4m.
In order to cope with this debt, management is considering selling its higher-quality asset, adult services, and using the money to deleverage. Investors have taken the decision well and Cambian's share price has been rising since July, bumped up another 12 per cent by these results. But some have concerns that a prospective buyer may use Cambian's position to drive the price down.
Prior to these results, broker JP Morgan forecast a loss per share of 4.25p for the year to December 2016, compared with 5.3p the prior year.
CAMBIAN (CMBN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 90p | MARKET VALUE: | £165m | |
| TOUCH: | 89.5-90p | 12-MONTHHIGH: | 301p | LOW: 49p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 131p* | NET DEBT: | 105% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 141 | 10.0 | 4.1 | nil |
| 2016 | 160 | -3.5 | -1.6 | nil |
| % change | +13 | -135 | -139 | - |
Ex-div: na Payment: na *Includes intangible assets of £184m, or 100p a share | ||||
