"Resilient": a word repeated throughout social care provider CareTech’s (CTH) results for the six months to March. And not without good reason. Despite the turbulence of the past few months, the group delivered numbers in line with market forecasts. It also raised the half-year dividend by 7 per cent, having delivered cash conversion of 92 per cent and reduced its net-debt-to-cash-profits multiple to 3.7 times – well under the covenant limit of 4.5 times.
Looking ahead, finance director Christopher Dickinson anticipates “more of the same” – contending that the group’s model is “defensive” and “visible”. CareTech continues to expect to meet its full-year outlook.
It helps that all of the group's operational sites, which are fully funded by local authorities, have remained open. Less than 3 per cent of CareTech’s users fall into the NHS high-risk categories for Covid-19. Most are children and adults with learning disabilities, mental health diagnoses or with challenging behaviours.
CareTech sharpened its focus on children's services via the acquisition of Cambian in 2018. Integration here has continued, with Cambian’s cash profit margin rising to 14 per cent. In the medium term, the goal is to take this to 16 per cent – while achieving £5m in pre-tax profit synergies for 2020.
Broker Panmure Gordon expects adjusted EPS of 41.4p for September 2020, from 37.5p in FY2019.
| CARETECH (CTH) | ||||
| ORD PRICE: | 398p | MARKET VALUE: | £446m | |
| TOUCH: | 391-408p | 12-MONTH HIGH: | 502p | LOW: 285p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 314p * | NET DEBT: | 81.5% ** | |
| lf-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 193 | 6.85 | 5.8 | 3.75 |
| 2020 | 209 | 17.7 | 9.5 | 4.00 |
| % change | +8 | +158 | +64 | +7 |
| Ex-div: | 22 Oct | |||
| Payment: | 23 Nov | |||
*Includes intangible assets of £172m, or 153p a share **Includes lease liabilities of £18.5m | ||||
