CareTech Holdings PLC Preliminary results for the year ended 30 September 2015 1
Contents • Executive summary • Overview • Highlights • Initiatives underpinning growth • Organic growth initiatives • Pipeline and acquisitions • Our people • Overcoming headwinds • Divisional breakdown • Financial results • Key investment merits and the journey so far • Summary 2
Executive Summary • CareTech has a proven track record of growth, profitability and cash generation over 20 years • Underlying EBITDA and Diluted EPS has grown by CAGR of 30% and 25% respectively since IPO • We operate in the £10bn per annum UK Social Care sector • Significant organic growth opportunities and bolt on acquisitions are targeted • Being driven by: – Market growing by 5% per annum – Increased outsourcing – Regulatory burden – Shortfall of specialist beds 3
Overview • A leading specialist provider of social care for adults and children with complex needs • Long term annuity style income stream with strong asset backed balance sheet • Freehold property portfolio of 164 homes independently valued at £294m • Grew range of complementary services and extended geographical coverage through bolt on acquisitions • Specialist operating divisions with client focused care pathway approach: Young People Adult Services • Young people residential services • Adult learning disability • Fostering care • Mental health Learning services 4
Highlights Operational Financial • Share placing funds raised of £21m • Underlying EBITDA increased by 6% to £32.5m (2014: • £30.7m) Accelerated organic growth • Good progress on aquisitions • Underlying PBT increased by 12% to £22.0m (2014: • £19.7m) Strengthened management team • • Amend & Extend Bank Facilities Underlying diluted EPS increased by 2.5% to 31.79p (2014: 31.01p) • Extended facility to 2019 Targeting • • Improved terms Final dividend up by 3.7% to 5.60p (2014: 5.40p) and double digit Full Year Dividend is up 5.0% • Acquisitions growth • • Two in July 2015 and one last week Underlying operating cash inflow of £30.0m (2014: • Solid performance £30.3m) 92% cash conversion ratio • High quality ratings • Net debt at £158.5m (2014: £166.1m) • Extending Care Pathways through successful outcomes • Net assets increased by 21.7% to £132.9m • Improved occupancy rates • Independent Property Valuation £294m (2013: £275m) • Improved EBITDA margins 5
Initiatives Underpinning Growth Strengthened Management Team Organic Initiatives • New Staff In Core Business Reconfigurations of existing homes • Lindisfarne John Ivers - Chief Operating Officer • Brisbane Road • Excellent Sector experience Chief Operations Officer for HC One and New Organic beds previously Chief Executive of Nestor Healthcare • Walton Road • Whitefields Supported Living Senior Tender Writer • Prosperity House Head of Business Development for Children and Young People Services • Springfields • Cwlach Road Business Development Director for the North & Midlands Adults Division • Stronger development pipeline for 2016 Project Surveyor • Bolt on Acquisitions • New Staff in Acquired Businesses • Spark of Genius • Spark of Genius • • Dawn Hodge Associates Dawn Hodge Associates • • ROC North West ROC North West • Exclusivity on a further 2 businesses with Heads signed 6
Organic Growth - Reconfigurations of existing homes Lindisfarne – Reconfiguration to supported living Brisbane Road – Reconfiguration to supported living • Freehold Property in Wisbech • Freehold property in Ilford • Previously a 10 bed residential home with 30% occupancy • Reconfigured a closed service into 5 supported living flats • Reconfigured service after becoming Preferred Provider to • Capex investment £175k • 4 Clients in October Cambridge Supported Living • Now 6 self contained flats with bedroom, • Strong referral in December ensuite, kitchenette and living room and Communal areas • Capex investment £230k • Four clients in October • Two further clients in November (full) 7
Organic Growth – Supported Living New Beds Prosperity House • Consists of four self-contained flats and there Walton Road is a office space for staff and tenants Whitefields • The two ground floor flats are fully accessible • A three person house share with staff • Five-person shared supported living service for individuals with physical disabilities overnight facilities • Currently has three clients. Have several live in Gloucester for people with learning • People are supported to develop their disabilities and associated needs enquiries for remaining placement • Consists of a range of good sized bedrooms, living skills and to keep them safe • The project is an initiative sponsored by Herts • The current client group have diagnosis of communal living space, kitchen large garden Social Services and they cover any periodic Learning Disability, Epilepsy and Autism space voids • Currently fully occupied with three clients • Currently occupied by three clients and two strong referrals 8
Organic Growth – New Beds Childrens Service Fife, Scotland Springfield • Springfield is located within the Fife region of Scotland and is registered as a residential child care service for young people aged 12-17 years. • Springfield can accommodate up to four young people with social, emotional and behavioural difficulties. • The service is delivered within a detached farmhouse and a beautiful rural setting. • Currently full with 4 clients Adults Service – Llandudno, North Wales Cwlach Road • Residential property for people with mental health issues • 5 flat freehold property • Property was acquired and converted into a registered service following confirmation of demand by Conwy • Capex investment of £420K • Property is now full 9
Building and Developing our Pipeline 2015 Tender Success Additional Growth • 7 major contract retender renewals • Growth through growing core occupancy 3 Adults • Growth through reconfigurations of existing homes 2 Childrens and Young People and services 1 Fostering - Exploring 20+ potential projects in Adults 1 Training/Skills Funding - Exploring 7 projects in Childrens • 19 New business Wins Enhancing Care Pathway (New Services) 6 Childrens and Young People • Childrens Adults 2 Fostering • Leaving Care 16-18+ 9 Adults • Pre-Post Employment Support 2 Training/Skills Funding • Developing higher acuity services Acquisitions Pipeline • Wins in Bath, Somerset, Hampshire, Fife, East of England, • Geographic fit, high quality and reputation with West London, Cambridge, Walsall, Bradford, Kirklees, strong growth potential in value added high acuity Staffordshire, Liverpool, Rochdale and Wolverhampton areas • 26 wins in 2015 versus 23 in 2014 and 19 in 2013 • 4 targets under review of which 2 at Head of Terms Stage 10
Acquisitions Spark of Genius • Acquired July 2015 • Operates 9 residential homes in Scotland representing 48 beds and 3 schools for Young People with complex needs catering for up to 100 service users • Highly regarded with excellent quality ratings and reputation • Good geographic fit • Management team retained and incentivised to deliver 4 year development plan • Currently ahead of its business plan • Strong development pipeline in Central Scotland and North East England 11
Acquisitions Dawn Hodge Associates • Acquired July 2015 • DHA provide training, coaching and consultancy across a range of sectors • Specialise in health and social care qualifications • Based in Cheshire operates in North West • Ofsted Grade 1 outstanding rating • Best Provider of Learning and Development (Skills for Care Accolades 2015/16) finalist • Excellent fit with training and learning for staff and service users (pre-post employment) • Trading in line with expectations 12
Acquisitions ROC North West Ltd. • Acquired 1 December 2015 • North West based provider of residential care and education services for Young People with complex needs • Currently has capacity for 41 residential places in 7 residential homes in Lancashire and 25 education places in its school in Preston • Strong reputation and quality ratings • Excellent geographic and Care Pathways fit with CareTech • Management retained and incentivised 13
Our People Our Values (Dec 2015) • Skills for care and Department of Health Initiative • Friendly • First National Employer to sign up • Person Centred • Positive • Embedded in induction and staff training • Empowering • Innovative Engagement Survey 2015 CareTech Care Awards 560 respondents Responses very positive: Care Awards • Recognising our stars “CareTech being a good place to work” • 10 categories – 3 regional winners “Our staff being committed to providing a quality service for • National overall winners recognised • Gala Dinner Awards Event our service users” Service User Art Competition “Staff making a positive difference to people’s lives” • Over 100 service users took part “Staff having the right resources and training to do their roles” • Regional and National Winners awarded • Art on display Areas for senior team focus “Improved Communications” 14
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