Staff and customers of Cambian (CMBN) are likely to have flinched at these half-year results. Average daily admission fees to the group’s specialist homes and schools have been hiked by 6 per cent to £353 and management has plans to cut 60 jobs. But investors will feel differently. Rising fees helped to offset a capacity decline in the reported period, while cost savings are expected to spark a resurgence in the adjusted cash profit margin, which fell to 8.3 per cent in the second half, from 8.8 per cent in the comparable six months.
Overall, Cambian seems to be back in recovery mode after the slew of profit warnings which hammered its share price in 2016. The sale of the adult services division has rescued the balance sheet and brought finance costs down from £7.3m to just £0.1m. Operating cash inflows nearly tripled to £7.7m and management has reinstated the dividend.
But the group is still facing external turbulence as the UK care homes sector continues to be battered by regulation. Most recently, the government has increased the minimum wage for carers who sleep in care homes, which has forced Numis to lower its adjusted cash profit guidance for the year to December 2017. Still, the broker expects Cambian to move back into a pre-tax profit position by the year-end, delivering £8.7m and EPS of 3.8p (2016: a £37.4m pre-tax loss and EPS of 2.4p).
CAMBIAN (CMBN) | ||||
ORD PRICE: | 200p | MARKET VALUE: | £ 368m | |
TOUCH: | 199.8-200p | 12-MONTH HIGH / LOW: | 230p | 81p |
DIVIDEND YIELD: | 0.07%** | PE RATIO: | NA | |
NET ASSET VALUE: | 199p* | NET CASH: | £122m |
Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2016 (restated) | 94.5 | -12.7 | -5.4 | nil |
2017 | 101 | -1.2 | -0.6 | 0.14 |
% change | +6 | - | - | - |
Ex-div: | 5 Oct | |||
Payment: | 31 Oct | |||
*Includes intangible assets of £120m, or 65p a share | ||||
**Excludes 27.1p special dividend paid to shareholders on 15 September |