A need to begin tackling the debt pile has left social and residential care provider CareTech (CTH) reining-back on large-scale acquisitions. But fostering and social care businesses have been added to the mix - a decision that seems to have paid off. The 6.4 per cent rise in underlying operating profits during the year to £21.7m was driven significantly by such less capital intensive areas.
In fact, acquisition and capital spending costs fell £10m year-on-year to £10.7m, now that rebuilding work at several homes has been largely completed. "We've got to a level where the business is no longer so capital intensive," says executive chairman Farouq Sheikh. He also reckons that CareTech will grow organically by 100 care places a year to number 3,000 care home places within five years. The level of fees charged to cash-strapped councils remains a worry, but Mr Sheikh is assuming that fees will stay "neutral" with 95 per cent of growth coming from higher sales volumes. The group successfully refinanced its banking facilities during the period - its new facilities mature in 2017 and total £149.4m, at an interest rate of under 4.5 per cent. As part of that refinancing, the group's freehold property book was valued at £225m.
Broker Investec Securities expects adjusted pre-tax profit of £17.2m, giving adjusted EPS of 26.2p (2012: £16.5m/25.2p).
CARETECH (CTH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 172p | MARKET VALUE: | £88.1m | |
| TOUCH: | 172-175p | 12-MONTH HIGH: | 181p | LOW: 74p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 149p* | NET DEBT: | 172% | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 67.7 | 5.91 | 10.4 | 3.75 |
| 2009 | 83.4 | 6.81 | 10.7 | 4.70 |
| 2010 | 89.7 | 7.56 | 13.6 | 5.50 |
| 2011 | 109 | 7.42 | 11.7 | 6.00 |
| 2012 | 114 | 6.38 | 12.3 | 6.50 |
| % change | +5 | -14 | +5 | +8 |
Ex-div: 16 Jan Payment: 15 Feb *Includes intangible assets of £64.5m, or 126p a share | ||||
