CareTech trades 'broadly in line' amid staffing pressures

CareTech said in an update on Tuesday that group performance for the first half was “broadly in-line” with its expectations, despite Covid-19 causing some staffing pressures.

The AIM-traded firm said that led to lower-than-targeted occupancy and higher agency costs, leading to Covid-19 costs being incurred, which was part-funded by government support through the Infection Control and Testing Fund and Workforce Recruitment and Retention Fund.

It said that, while pandemic self-isolation restrictions had now been lifted in the UK and so costs reduced, it was ensuring its social care services were safe for both staff and users.

From 1 April, the group increased the minimum national hourly rate to £9.75 - 25p above the ‘National Living Wage’ minimum wage.

CareTech said that while wage increases and operational inflationary pressures were higher than previous years, it had “positive discussions” with local authorities and expected the majority of the additional operational costs to be covered by fee increases.

As at 31 March, unaudited net debt totalled £278.3m, widening from £258.7m at the end of September.

The board said the increase in net debt was due to the deployment of its “strong” operating cash flow by investing in new organic developments and bolt-on acquisitions.

CareTech acquired Rehavista in the period, providing a “significant opportunity” for its Smartbox operation to expand its products and services in Germany, further strengthening its technology division.

It also expanded in the United Arab Emirates through the acquisition of Dmetco-Bayti and Wellness, adding specialist health and social care services in home care environments and physical healthcare services in specialist clinic settings.

The board reconfirmed its final dividend of 9.5p per share, which would be paid on 4 May.

“I am pleased to report that the group's performance during the first half of the financial year has been broadly in line with the board's expectations, despite being set against a challenging staffing backdrop and inflationary pressures,” said executive chairman Farouq Sheikh.

“The group remains in a strong financial position and I remain confident in our outlook.

Sheikh noted that the company completed a number of acquisitions during the first half, saying the acquisition of Rehavists added “one of the leading companies globally” in the assistive technology arena, and further strengthened Smartbox's global presence.

“We were also pleased to complete the acquisition of Dmetco-Bayti and Wellness, which will build on our presence in the UAE through the AS Group, adding further well regarded homecare and clinic offerings to our portfolio.

“We warmly welcome the management teams of these recently-acquired businesses to CareTech.”

At 0815 BST, shares in CareTech were up 1.76% at 750p.