EXTRA: CareTech Aiming To Expand Reach Across UK With Acquisitions

LONDON (Alliance News) - CareTech Holdings PLC is aiming to expand across the UK through ...

Alliance News 19 June, 2017 | 1:17PM
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LONDON (Alliance News) - CareTech Holdings PLC is aiming to expand across the UK through further acquisitions, as the social care service provider posted an increase in interim profit and agreed a deal to buy Selborne Care Ltd.

For the six months ended March 31, pretax profit rose to GBP13.0 million from GBP11.4 million for the same period the previous year, on revenue of GBP78.7 million, up from GBP70.8 million.

Earnings before interest, depreciation and amortisation increased to GBP18.3 million from GBP16.8 million.

The London-listed company raised its interim dividend to 3.30 pence per share from 3.0p.

CareTech is aiming to expand its reach across the country through organic growth and also through acquisitions after the company raised GBP37.0 million from a placing of 11.0 million new shares in March to fund its strategy.

Since the end of March, CareTech has bought Beacon Reach Ltd in Preston, a children's education and residential facility set on 18 acres of pastureland, for GBP20.7 million, and on Monday followed this up by announced a deal to acquire Selborne Care, a provider of specialist residential care in the Midlands and the south west of England, for GBP16.9 million.

In calendar 2016, Selborne reported Ebitda of GBP2.4 million on revenue of GBP13.3 million. Its net assets on a debt-free, cash-free basis at the end of August 2016 came to GBP13.4 million.

These acquisitions build on the three acquisitions made in the first half of the year; Spark of Genius Ltd, a provider of education and residential care, Oakleaf Care (Hartwell) Ltd, a provider of long-term brain injury rehabilitation, and ROC North West Ltd, a care provider for children with autism and learning disabilities, which the company said have all continued to grow since they were bought.

In the medium term, the company said it is "focusing on organic growth that builds on our successful base position", but will "undertake further strategic acquisitions that meet our key criteria by offering new expertise, geographical presence or consolidation opportunities".

CareTech Chairman Farouq Sheikh said that there are a number of potential acquisitions under consideration and it has a "strong organic pipeline of additional beds in reconfigured services and in new services".

"The directors believe that this will lead to a sustained growth in capacity and revenues which will generate additional Ebitda and cash so that the group can achieve its target of double digit growth annually in underlying diluted earnings per share," he said.

CareTech is expecting the specialist social care market to continue to benefit from strong demographic trends across the UK and said that local authorities are facing increasing demand and financial pressure, which have led to a greater focus on value for money.

The company said it is able to provide transitional care services for patients such as supported housing or foster care for children, and it anticipates a further shift toward sophisticated supported living packages linked to new personalised payment methodologies.

Shares were up 2.1% at 433.0 pence on Monday.

By Maryam Cockar; maryamcockar@alliancenews.com; @MaryamCockar

Copyright 2017 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar Rating
CareTech Holdings PLC 420.00 GBX 0.00 -
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