It is business as usual at UK social care services provider CareTech (CTH:AIM) with sales and profitability rising despite the potential distraction from the acquisition of Cambian.

Sales at CareTech climbed 11.9% to £185.7m and underlying pre-tax profit jumped 11.9% to £32.9m in the year to 30 September, supported by strong demand.

In the company’s biggest division, Adult Learning Disabilities, sales rose from £87.7m to £101m. These results don’t include any contribution from Cambian as the acquisition completed in October.

CAMBIAN TO FUEL EARNINGS GROWTH

CareTech hopes behavioural health service specialist Cambian will boost its growth by offering access to 222 residential facilities, specialist schools and fostering offices in England and Wales.

The acquisition looks a canny move by CareTech, with earnings per share set to soar 30% to 45.8p by 2021 as the full synergies from Cambian come through, according to forecasts from WH Ireland (WHI:AIM).

There is a huge opportunity for growth but management now need to focus on successfully integrating Cambian, which shouldn’t be a big issue given CareTech’s strong mergers & acquisitions (M&A) track record.

Panmure Gordon analyst Julie Simmonds says the investigation into the CareTech-Cambian deal by competition authorities is expected to finish early next year.

Shares in Cambian initially rose 3% on the results, before reversing 3.4% to 342p.


Issue Date: 06 Dec 2018