Social and mental care home operator CareTech (CTH) seems to be benefiting from recent investments. On an underlying basis, pre-tax profit rose 22 per cent to £11.5m on the back of a growing portfolio. The reported figures were further boosted by a £5.6m payment from a ground rent transaction, as the group looks to get more value out of its current estate.
Operational performance is strong: cash flows rose by a fifth. The group made enough cash in the period to pay down debt and increase the dividend. With the help of a share placing in March 2015, CareTech acquired ROC North West - a group of children's residential homes. A ground rent transaction in February 2016 raised £29m net which it used the following month to buy Oakleaf Care, which specialises in rehabilitation post brain trauma. The overall capacity of the group's portfolio has increased by 176 places to 2,292 since the year end.
Maximising the efficiency of the group's homes had a particularly marked effect on the adult division, where margins improved from 28 per cent to 29.5 per cent. Revenue from services for young people was boosted 44 per cent thanks to two acquisitions made in July 2015.
Analysts at Panmure Gordon expect full year adjusted pre-tax profits of £26m, giving adjusted EPS of 33.6p, up from £22m and 31.6p in 2015.
CARETECH (CTH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 233p | MARKET VALUE: | £150m | |
| TOUCH: | 228-237p | 12-MONTH HIGH: | 260p | LOW: 213p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 219p* | NET DEBT: | 111% | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 60.7 | 4.1 | 5.9 | 2.8 |
| 2016 | 70.8 | 11.2 | 14.0 | 3.0 |
| % change | +17 | +171 | +136 | +7 |
Ex-div: 26 Oct Payment: 25 Nov *Includes intangible assets of £87.7m, or 137p a share | ||||
