1、ANNUAL REPORT AND ACCOUNTS 2018Extraordinary days every dayOur clients,John and Ann Marie Mellings,met 10 years ago and romance blossomed at Cranleigh Court in Wigan.They married in June 2018 and this is a picture of the happy couple.CareTech provides high-quality support and care for individuals wh
2、o often have complex needs.Delivering a safe and secure support of very high quality,ensuring that all our service users enjoy extraordinary days,every day.Our purposeDelivering innovative social care on behalf of local authority and health service commissioners throughout the UK,CareTech has a long
3、 established reputation as a provider of high quality and safe services.CareTech offers a comprehensive outsourcing service to commissioners with the experience and commitment to provide exactly what is required.Focusing on the high acuity social care population we support children and adults throug
4、h solutions that are both individual and tailor made to each of our service users.Our core services provide for adults with learning disabilities,individuals who have or are recovering from mental illness,people with autistic spectrum disorder,people who have one or more physical impairments and pro
5、vide care and rehabilitation for men with acquired brain injury(“ABI”).We deliver support through residential services and a wide choice of creative home based-options.Our children services cover assessment,residential care,education and fostering options,including specialist provision for very comp
6、lex young people.We carefully and professionally support any child irrespective of their reasons for being in public care.We can provide the right solution for complex and difficult situations through our nationally recognised expertise in provision for children and young people who present with sex
7、ually offending behaviours or who have emotional and behavioural disorders.Our comprehensive service includes education in Ofsted registered schools of very high quality.CareTech pioneered transition services for young people leaving care and for adults who are making the move into their own home af
8、ter a lifetime in residential or institutional settings.We remain a national leader in the drive to enable people to live in a home of their own.We believe in opportunity and have developed an enviable reputation as a leading provider and organiser of modern apprenticeships within exciting projects
9、across the UK.About usStrategic Review 1 Financial and Operational Highlights2 Group at a glance10 Group Chairmans Statement14 Strategic Report 14 Creating sustainable value in our markets 16 A strategy to drive future growth 18 Our key performance indicators 20 Principal risks and our strategic res
10、ponse22 Group Chief Executives Statement and Performance Review28 Corporate Social Responsibility30 Group Financial ReviewGovernance34 Board of Directors36 Corporate Governance Report43 Directors Report45 Remuneration Report48 Statement of Directors Responsibilities in respect of the Annual Report a
11、nd the Financial StatementFinancial Statements 49 Independent Auditors Report to the members of CareTech Holdings PLC 53 Consolidated Statement of Comprehensive Income54 Consolidated Statement of Financial Position55 Consolidated Statement of Changes in Equity56 Consolidated Statement of Cash Flow57
12、 Notes to the Financial Statements 81 Company Statement of Financial Position82 Company Statement of Changes in Equity83 Company Statement of Cash Flow84 Company Notes to the Financial Statements89 Directors and AdvisersContentsFinancial and Operational HighlightsRevenue 185.7mincreased by 11.9%(201
13、7:166.0m)Underlying profit before tax(ii)32.9mincreased by 11.9%(2017:29.4m)Net cash inflows from operating activities 30.9m(2017:22.1m)with net debt(iii)of 147.0m(2017:147.1m)Property portfolio 424mindependently valued(2017:329m)Statutory financial highlights 40.2mEBITDA(iv)increased by 10.4%(2017:
14、36.4m)20.2mOperating profitdecreased by 11.0%(2017:22.7m)14.06pDiluted earnings per sharereduced by 44.8%(2017:25.48p)(i)Underlying EBITDA is operating profit stated before depreciation,share-based payments charge and non-underlying items.(ii)Underlying profit before tax and underlying basic earning
15、s per share are stated before non-underlying items.(iii)Net Debt as defined by the Groups Banking facilities and comprises cash and cash equivalents net of all Loans and Borrowings due to the Groups Bankers.(iv)EBITDA is operating profit stated before depreciation and share-based payments.(v)Overall
16、 capacity has increased by 88 with 69 additional beds in reconfigured services and new services,69 new beds in Childrens Services and 50 beds were withdrawn for reconfiguration.Underlying EBITDA(i)43.9mincreased by 10.0%(2017:39.9m)Underlying basic earnings per share(ii)35.07p(2017:38.03p)Overall ca
17、re capacity increased by 88(v)2,622 places(2017:2,534)Occupancy 2,438(2017 2,159)Final dividend per share 7.50pincreased by 13.6%(2017:6.60p)Find out more online:www.caretech- ReviewGovernanceFinancial StatementsCareTech Holdings PLC Annual Report and Accounts 20181ADULT SERVICES Social care service
18、s for adults over the age of 18ADULT LEARNING DISABILITIES CareTech has always operated at the highest acuity range on the social care spectrum,providing individual tailor made solutions for people living in their own homes,residential care or independent supported living schemes.We believe that we
19、should continue supporting those with the greatest need and this accords with local authority commissioning trends.Adults with learning disabilities are increasingly being provided with direct funding to enable them to purchase their own care and support.We work actively with service users and advis
20、ory bodies to deliver self-directed support packages and see this as an increasingly important aspect of our service model,as well as offering commercial opportunity.For many people with the most complex intellectual or physical challenges,residential care will continue to be the preferred option al
21、though the services will change in their approach as we move toward a more enabling,modern type of service.An alternative to residential care is the opportunity for people to live in a home of their own,sometimes shared with others.CareTech is a leader in the provision of supported living and offers
22、 packages of individualised self-directed support to people in their own homes.SPECIALIST SERVICES Specialist services provision continues to dominate the health and social care agenda.Good specialist services is a significant contributor to a healthy community and national economy,while mental ill
23、health is devastating to individuals and their families.Most commissioners are driven by a wish to reduce patient time in acute care and rely on creative outsourcing to dramatically cut the cost of specialist services care in hospital and within the criminal justice system.CareTechs specialist servi
24、ces team works in partnership with the NHS and social service departments to ensure a successful transition out of acute care and the prison service,delivering pathways to an ordinary life.We also have an outstanding track record for diverting people away from acute care and supporting them in their
25、 own homes.CareTechs highly effective care teams are developing new ways to offer community support solutions and we believe that this will be an important growth platform in years to come.For men with Acquired Brain Injury(ABI)we provide a range of pathways from rehabilitation through to long term
26、and end of life care.CareTech offers highly specialised rehabilitation beds as well as a step down provision of community-based beds.Care capacity 2018:1,754(2017:1,735)Contribution to Group revenue:54.4%(2017:52.9%)Split by:Residential care Independent supported living Community support servicesCar
27、e capacity 2018:214(2017:214)Contribution to Group revenue:8.2%(2017:9.3%)Split by:Residential care Independent supported living Community outreachCaring every dayThe Company was formed in 1993 and was admitted to the AIM market at the London Stock Exchange in October 2005.Since the CareTech Group c
28、ame to the AIM market 13 years ago,it has evolved through a mix of organic and prudent acquisitive growth that has led to our current position as one of the best-established and reputable national social care providers.We have national coverage across England,Wales and Scotland in a highly fragmente
29、d UK social care market.We cover the majority of the social care spectrum except elderly care.The CareTech Group provides care and support to individuals in need.This is mainly for people who have a learning disability,some of whom may have associated physical or psychological impairment.However,the
30、 company also supports a number of people with other disorders including those with autism,sensory impairment,physical disabilities or mental health problems.Many of the services are offered in residential care settings in community-based settings,including a number of nursing homes.All the resident
31、ial homes are registered with the UK Government regulator,mainly with the Care Quality Commission,Ofsted and also with other regulators.CareTech also provides care and support to a significant number of people who have their own tenancies(supported living)and in various day centres or hostel type ac
32、commodation.The total market value is estimated(Laing and Buisson 2017)to be worth 7bn for children services and 5bn for the care of younger adults(below 65 years of age)in the learning disability and specialist services categories.The private sector share of this market has developed through succes
33、sful outsourcing of services over the last 20 years and this trend is expected to continue.Local Authorities have largely protected their budgets for children and complex younger adults.2CareTech Holdings PLC Annual Report and Accounts 2018Group at a glance Extraordinary care CHILDREN SERVICES Socia
34、l care services for children and young people up to the age of 18LEARNING SERVICES FOSTER CAREFoster Care is undoubtedly the best care solution for most“looked after”children.Most children thrive in foster care where they are supported within an ordinary family home and with trained foster carers.Ca
35、reTech provides for both mainstream and specialist foster care through local agencies across the UK.We offer a highly respected service for physically and intellectually disabled children as well as support for children with sensory impairments.We provide foster care family assessments and ongoing s
36、upport to children who remain with their birth families and in their family home.YOUNG PEOPLE RESIDENTIAL SERVICESFor a relatively small number of children,residential care offers a safe and helpful solution for their care needs and CareTech has developed an extensive range of highly technical care
37、and education environments where those children will thrive.Our residential provision offers high staff ratios and highly skilled carers,capable of ensuring both safety and progression.These are high cost services where we aim for an intensive period of care and a strict timetable that delivers resu
38、lts at a fair price to commissioners.As far as practicable we aim to help these children through our therapeutic care approach to move into a more normalised family style environment as soon as it is practicable to do so.These services are highly integrated operations with dedicated staff ratios and
39、 may also include on site or dedicated educational facilities.LEARNING SERVICESSince modern apprenticeships started several years ago we have witnessed a dramatic shift in the way young people enter the adult workforce.People are increasingly opting for an apprenticeship as an alternative to or as w
40、ell as attending University.This was especially true of the Care Sector but a whole new generation of young people are now looking at the apprenticeship model as their further training of choice.Through acquisition and the development of established apprenticeship providers CareTech has embraced the
41、 opportunity to capitalise on this change and to work closely with Government agencies to improve the quality and skill base of our national workforce.We have chosen to call our apprenticeship scheme a Learning Service to reflect the aspiration of the young people we work with.Although Learning Serv
42、ices provide training across the whole workforce we have naturally developed expertise within the very extensive social care sector.Learning services addresses an adult social care workforce in England of some 1.16m people,905,000 of whom work within the independent sector(Skills for Care 2013).Ther
43、e are 21,200 organisations providing Adult Social Care in England and the majority of these are operating at far too low a scale to deliver their own training or apprenticeship programmes.Dawn Hodge Associates received an“Outstanding”from Ofsted earlier this year and has significant market presence
44、in social care and are well positioned to support both smaller companies as well as corporate providers.The introduction of the apprenticeship levy has caused a decline in companies offering apprenticeships.However,the Government has a target of 3 million apprenticeships by 2020.(Sourced from Gov.UK
45、).Care capacity 2018:301(2017:301)Contribution to Group revenue:4.4%(2017:5.2%)Split by:Residential care of children and young people Family assessments in the homeApprentices 2018:266(2017:509)Contribution to Group revenue:1.4%(2017:6.2%)Split by:Pre-employment programmes Development programmes App
46、renticeshipsCare capacity 2018:353(2017:284)Contribution to Group revenue:31.6%(2017:26.4%)Split by:Residential care of children and young people Education services for children and young peopleStrategic ReviewGovernanceFinancial StatementsCareTech Holdings PLC Annual Report and Accounts 20183QUALIT
47、Y AND EXPERTISEDelivering quality to achieve positive outcomes for our individuals is at the heart of the organisation.Our approach is to employ well qualified and skilled professionals who can ensure that we consistently exceed the expectation of our service users,their families,social workers and
48、commissioners.PLACING PEOPLE IN THE CARE OF ORGANISATIONS THAT YOU CAN TRUSTThe business of care is predicated on relationships,as much as it is on the practical support and guidance that we offer on a daily basis.Troubled children need the warmth and challenging support of their care workers while
49、disabled adults make best progress within the trust that a great relationship brings.We are also mindful that social workers will prefer to place people in the care of organisations that share their commitment to optimism for service users,that they can rely on and deliver outstanding value.4CareTec
50、h Holdings PLC Annual Report and Accounts 2018Group at a glance continued Extraordinary quality Strategic ReviewGovernanceFinancial StatementsCareTech Holdings PLC Annual Report and Accounts 201856CareTech Holdings PLC Annual Report and Accounts 2018Group at a glance continuedWe fundamentally believ
51、e in choice for all our clients and our determination to provide this choice in all our services is uppermost in our commercial thinking.CLIENT FOCUSED INNOVATIVE CARE PATHWAY APPROACHCare and support is characterised by optimism and a genuine belief in the abilities of our service users.Everyone we
52、 support has an opportunity to make progress in their lives and our professional teams work hard to help those people understand how to move forward.Many years ago we began to describe our services as a Care Pathway,making clear our intention to break away from the old belief that care is for life.W
53、e have delivered on this commitment and everyone we support,from young children to profoundly disabled adults,shares our approach to maximise their independence.This is great for service users,rewarding for our staff and strongly supported by those who commission and support our services.INNOVATE CA
54、RE PATHWAYSOne of the characteristics that differentiates CareTech from the average provider is our commitment to opportunity.Long before it became fashionable we introduced the concept of a Care Pathway to reflect our optimism that users of our services can make progress in their lives.We were neve
55、r content to accept that someone in residential care should always be in residential care and developed alternatives at an early stage in our development as a Group.Strategic ReviewGovernanceFinancial StatementsCareTech Holdings PLC Annual Report and Accounts 20187 Extraordinary choiceCareTech is a
56、public company which operates throughout England,Scotland and Wales.Our target in the next few years is to continue to grow and to combine this with care excellence.We continue to consolidate in a growing and highly fragmented market.NATIONAL PRESENCECareTech is very well known as a care company in
57、public ownership that operates throughout England,Scotland and Wales.Our national presence is reinforced through conferences and publications where the CareTech view is frequently sought and taken into account.STRONG BRANDFinancial security,probity and reliability combine to offer confidence in the
58、CareTech brand.We offer high quality services with a strong ethical and value base with the benefits of scale,operating within friendly and trusted local service businesses.8CareTech Holdings PLC Annual Report and Accounts 2018Group at a glance continued Extraordinary growth Strategic ReviewGovernan
59、ceFinancial StatementsCareTech Holdings PLC Annual Report and Accounts 20189As previous press releases have mentioned,the sad and untimely death of the Group Finance Director,Michael Hill,I wish to express my own thoughts on this tragic event.I first met and started working with Michael in 2010.Mich
60、ael very quickly became an integral part of the CareTech family and in the ensuing years,particularly throughout significant periods of growth in the Group and its structure,I came to rely on Michaels financial wisdom and his calmness during long periods of negotiations.His innate professionalism an
61、d exemplary work ethic was widely respected by his peers.Michael had a charming and exuberant personality and was much loved both by all who worked for Caretech.He was a shining light in treating people with both fairness and compassion.Michael was my good friend and colleague for over eight years a
62、nd I will miss him.I am privileged to present our results for the period ended 30 September 2018 being our 25th year in business.This is a real milestone for CareTech and has proven to be another exceptionally busy and successful year,with the key highlights being:Accelerated organic initiatives inc
63、luding property purchases and reconfigurations Further strengthening of our management team and investment in IT systems Strengthening of our Care Pathways and outcomes for our service users Improvement on CQC and OFSTED Quality Ratings across the Group Exciting initiatives and partnerships launched
64、 by the CareTech Charitable Foundation Agreed highly complementary and significantly accretive acquisition of Cambian Group plcIt is really pleasing to note that,over these years,we continue to maintain our position as a leading care provider with our improved quality ratings across the Group.Anothe
65、r successful year creating a transformational platform for further expansion.Farouq Sheikh Chairman10 CareTech Holdings PLC Annual Report and Accounts 2018Group Chairmans StatementCelebrating 25 years in business I am personally reminded of our very humble beginnings all the way back in 1993,from ou
66、r very first home in 44 The Avenue,Watford.Having just completed the Cambian acquisition post year end,we now have a national presence with over 450 homes and schools in the UK with around 10,000 staff supporting some 4,500 vulnerable young people and adults.This has been an incredible journey that
67、has only been possible due to the hard work and dedication of each and everyone one of our staff that make up the CareTech family!As we celebrated our 4th year of our National Care Awards on the 23rd of November many of our staff were there and received acknowledgement and thanks for their hard work
68、.Personally it was so touching to have one of the parents,whose son was placed in our second home known as Morven Park back in 1994,pay tribute to the company for the care and support provided to her son for the 17 years he was with us.We are pleased that we still have an active engagement with her
69、after her son sadly passed away.It is a testament to the relationship we build with the nearest and dearest of those we support.When we set up CareTech all those years ago our underlying vision was very simple.We wanted to build the very best designed homes,furnish them to the highest of standards a
70、nd match this with an innovative person centric care and support package.We wanted to be different and create a feeling that parents,carers,care managers felt so overwhelmed with our unique offering that they instantly wanted to move in themselves!We saw this reaction over many of the homes we opene
71、d and this created a buzz in the sector!And so 25 years on,our underlying vision remains the same.We will endeavour to develop the best designed and furnished homes ones that we would be happy to live in ourselves.Coupled with this we will provide the bespoke support for our service users as we woul
72、d want to provide for our nearest and dearest.If we sincerely stick to these simple principles we will always be at the forefront of our industry and,as a result,the financial metrics will take care of themselves.Accordingly below is a summary of our financial results for this year are where:Revenue
73、 has increased by 11.9%to 185.7m Underlying EBITDA has increased by 10.0%to 43.9m Underlying profit before tax has increased by 11.9%to 32.9m Underlying basic EPS at 35.07p per share Net Assets increased by 2.0%to 208.2m(2017:204.2m)Cash inflows from operating activities before non-underlying items
74、of 39.1m(2017:32.7m)with net debt(iii)of 147.0m(2017:147.1m)Full year dividend increased by 13.6%to 7.5pAll of the above mentioned initiatives demonstrate a solid performance on delivery of both the key financial and non-financial metrics and put the Group in a strong position to target further unde
75、rlying EPS growth going forward.The results are especially pleasing as management have had an extremely busy year producing solid financial year on year metrics whilst:continuing with a significant number of organic and reconfiguration initiatives improving care quality ratings across all service se
76、gments maintaining strong occupancy across the portfolio of homes achieving industry leading staff retention rates completing post year end,the transformational and highly complementary and accretive acquisition of Cambian Group plc enlarged Group property portfolio valuation updated as part of the
77、transaction at 774m Management have done extremely well to manage these various work streams whilst ensuring the core business moves forward on all fronts.The Group has stood out from its peers as a company that can successfully combine quality,integrity and sound financial acumen and has consistent
78、ly achieved good care quality ratings.Our credibility as the provider of choice has never been stronger and we continue our successful growth strategy with a confident outlook.Continuing with our strong organic growth,once again the Group has purchased a number of properties including Red Rock,Thorn
79、garth,and Oaklea.Further investment has also been made during the year on previous purchases with over 1.2m invested in Beacon Reach,a school run by ROC Northwest,and 1.1m on Hidelow school in Shropshire.All of these projects will deliver incremental earnings as they reach mature occupancy.Pleasingl
80、y,ROC Northwest has won the coveted Laing and Buisson Award in Social Care for Childrens Services.During 2018,we again closed several services for reconfiguration which impacted the growth in revenue.Offsetting this,there are improved fees following reconfiguration plus the impact of cost saving ini
81、tiatives and the time and attendance system has further improved underlying EBITDA.The Groups organic development programme will continue with further reconfigurations and,for 2019 we have a strong pipeline of development opportunities with one property purchased soon after the year end.The Group co
82、ntinue to look at a number of other acquisition opportunities and are confident that there will be further opportunities in the coming year.In the 13 years since joining AIM,the business has transformed from being very focused on supporting adults with a learning disability through residential and d
83、ay care settings to one where today we cater for young people and children with complex needs across a range of settings,be it residential,supported living or community support.We focus on the most complex and vulnerable young people and the market for this client group stands at over 10bn.There is
84、currently an undersupply of specialist beds in this niche area and the market is growing by almost 3%per annum.Over the years we have developed a range of care pathways and helped many that we support to live more independently.This is a fantastic outcome for both us and the individuals that we supp
85、ort and it also helps local authorities meet the ever increasing cost of social care provision.Strategic ReviewGovernanceFinancial StatementsCareTech Holdings PLC Annual Report and Accounts 201811Shortly after the year end the acquisition of Cambian Group plc was completed.Cambian is a leading child
86、rens specialist education and behavioural health service provider.The Cambian Groups services have a specific focus on children who present high severity needs with challenging behaviours and complex care requirements.Cambian currently looks after over 2,000 children and employs over 4,500 people ac
87、ross a portfolio of 222 residential facilities,specialist schools and fostering offices located in England and Wales.Even with the significant growth we have achieved to date,and also with the Cambian acquisition post year end,we still have less than 5%of this very large and fragmented market.With t
88、he increasing regulatory burden,the opportunity for further consolidation is even more attractive.DividendThe Group policy has been to increase the total dividend per year broadly in line with the movement in underlying diluted earnings per share.In 2018 there was a slight reduction in underlying di
89、luted earnings per share of(2.96p)mainly due to the share placement in March 2017,which increased the number of shares in issue.The Board has proposed a final dividend of 7.5p(2017:6.60p)per share bringing the total dividend for the year to 11.0p(2017:9.90p)per share.This represents a full year incr
90、ease of 11.1%year on year.The final dividend will be paid,subject to shareholder approval,on 8 May 2019,with an ex-dividend date of 7 March 2019 and an associated record date of 8 March 2019.Our BoardThere have been no changes to the Board during the year.Providing the foundation for further growth,
91、the Senior Executive Team at CareTech has been strengthened by a number of senior appointments during the year.During the year the Remuneration Committee,the Audit Committee and the Care Governance and Safeguarding Committee were unchanged.As stated in the prospectus accompanying the Cambian acquisi
92、tion it is our intention to add two additional independent non-executive directors to the Board within three months of completion of this acquisition.Alongside additional non-executive appointments it is expected that,following our acquisition of Purple Zest,Mike Adams will become an Executive Direc
93、tor of the Group.Our peopleWe have completed our planned evolution into two well defined operating divisions,Children Services and Adult Services,and this has generated organisational efficiencies.Simplifying the structure has also supported planning and service delivery with a more powerful approac
94、h to development.Our continuing growth,measurable success and forward-looking approach are a reflection of the hard work and dedication of staff and managers throughout the organisation.I am always drawn to the achievements of our excellent front line staff,which is inevitable as we are first and fo
95、remost a care organisation.Their care and commitment would be much less without the dedicated support of our administrators and support teams whose hard work and energy is critical to the success of our Company and the care we provide.In March 2016,the Company announced the creation of the CareTech
96、Sharesave Scheme,a Government supported method for any of our staff to have the opportunity to participate in the Companys equity.In October 2017,we announced a second CareTech Sharesave Scheme and 259 members of staff chose to join this new saving scheme.We plan to introduce another CareTech Shares
97、ave Scheme early in 2019 as this is one part of our staff retention strategy.With the launch of the CareTech Charitable Foundation in May 2017 I am pleased that we were able to support members of the CareTech family even more.The Foundation has ambitious and clear sighted objectives to deliver meani
98、ngful impact to communities in the UK and overseas about which the staff of the Group and its service users feel proud and strongly engaged,providing a unique contribution to the charitable marketplace consistent with the Groups values and approach.Post Balance Sheet events acquisition of Cambian Gr
99、oup plc and new banking facilitiesAs mentioned in my report above,I am extremely pleased to report that we completed the acquisition of Cambian Group plc on 19 October 2018 following the Rule 2.7 Offer on 16 August 2018 and the Prospectus on 19 September 2018.Work began on this project at the beginn
100、ing of the year and after several approaches and considerable due diligence it was pleasing to issue the Rule 2.7 Offer in August.This offer could only be made with Shareholder support,Banking support and the agreement of the Cambian Board of Directors.Shareholder support through Rule 2.4 Irrevocabl
101、e Undertakings in July to the revised possible offer was important to being able to make a Recommended Offer for Cambian Group plc in August.The Rule 2.7 Offer was made with 9 Irrevocable Undertakings from Cambian plc Shareholders plus the Directors and 2 CareTech Holdings PLC Shareholders plus the
102、Directors.I am very grateful for the support of our Shareholders during this acquisition.I also welcome to the enlarged Group the new CareTech Shareholders who were Cambian Shareholders that took the Headline Offer.Financing support was provided by Lloyds Bank PLC and National Westminster Bank PLC a
103、s Mandated Lead Arrangers who provided a Term and Revolving Facilities Agreement with total commitments of 438.7m in support to the Rule 2.7 Offer.Subsequently this was successfully syndicated and the final Bank draw down was 427.1m.I am grateful to the Banks for their backing.The Board of Cambian G
104、roup plc played a key role in professionally dealing with our approaches and working well with the CareTech team during the due diligence process.Now that the acquisition has completed we are working with the Competition and Markets Authority and planning IT integration.This is an exciting phase pos
105、t acquisition and in the coming months I look forward to meeting more members of the Cambian team when I visit services.12CareTech Holdings PLC Annual Report and Accounts 2018Group Chairmans Statement continuedOutlook and prospectsWe operate in a growing social care market worth over 10bn per annum
106、and we are well positioned to meet market demand.We have developed outcome-based Care Pathways which deliver value-based services for our Local Authority partners.With the new long-term Banking facilities and solid free cash flow generated from the enlarged Group,we look forward to the integration o
107、f Cambian during 2019.Their focus on children who present high severity needs with challenging behaviours and complex care requirements is an excellent fit alongside the CareTech Children Services,and this extension of current Care Pathways and geographic presence is a major opportunity to the enlar
108、ged Group.We have major investment plans for 2019 and beyond with key new organic developments and bolt-on acquisitions.Importantly,we also continue to see how we can enhance further,the use of technology as a validation of our work as well as for diagnostic and assessment purposes,whilst exploring
109、international market opportunities and in particular the GCC.We will further strengthen our management team offering a forceful blend of experience,commercial wisdom and dedication to care.I have no doubt that the next few years will see continuing growth and care excellence which will help deliver
110、our target of double digit growth in underlying EPS.Farouq SheikhGroup Executive Chairman20 December 2018Strategic ReviewGovernanceFinancial StatementsCareTech Holdings PLC Annual Report and Accounts 201813ADULT SERVICES*CHILDREN SERVICES*ADULT LEARNING DISABILITIES Residential care Independent supp
111、orted living Community support servicesFOSTER CARE Fostering Family assessments in the homeSPECIALIST SERVICES Residential care Independent supported living Community outreachYOUNG PEOPLE RESIDENTIAL SERVICES Residential care of children and young people Education services for children and young peo
112、pleThe Directors present their Strategic Report on the Group for the year ended 30 September 2018.In preparing this report,the Directors have complied with S414C of the Companies Act 2006.The Strategic Report should be read in conjunction with the Strategic Review for the Group which includes the Hi
113、ghlights,Group at a glance,Chairmans Statement,Strategic Report,the Chief Executives Statement and Performance Review and Financial Review.Our marketThe care market in which the Group operates is a UK market worth an estimated 10bn per annum across the Adult Services for adults over the age of 18 an
114、d Children Services for children and young people up to the age of 18.The principal driver for commissioners in local authorities and the NHS is value.This is interpreted by them as the optimum balance between quality and price,but has an underpinning criterion determined by“outcomes”.CareTech has b
115、een aligned to this set of purchasing principals and we work closely with commissioners to ensure that we stay in tune with their approach to market management.Most providers of social care have fewer than three services and this huge,fragmented range of providers dominates the market.However,the ma
116、rket has been steadily consolidating and a very small number of large“corporate”providers have emerged,with CareTech being one of the bigger players within the non-elderly care sector.Numerically the large providers will have a very small minority of the market capacity and all the evidence suggests
117、 that consolidation will continue,perhaps accelerate,during the foreseeable future.Although the available resources to purchase social care remain largely static there is a known increase in demand across the whole spectrum,presenting purchasing bodies with a conundrum.One response has been to move
118、money away from the NHS in order to allow local authorities greater purchasing power.However,the most significant change has been to a system of aggressive rationing.This has focused money on the areas of highest need such as complex children,very disabled or complex people with learning difficultie
119、s and hospital discharge schemes.This is where CareTech has developed its provision and helps to explain why spending cuts have had minimal impact on the Group.14 CareTech Holdings PLC Annual Report and Accounts 2018Strategic ReportCreating sustainable value in our markets*Data from Laing and Buisso
120、n Adult Specialist Care 2nd edition 2015/2016 report.*Data from Laing and Buisson Childrens Services Market Report 3rd edition 2017 report.HIGHLIGHTS 78,000 People in the UK cannot live independentlyHIGHLIGHTS 51,850 People placed in foster care in EnglandHIGHLIGHTS 13%Of the UK population have spec
121、ific mental disordersHIGHLIGHTS 10,085 Children in UK looked after outside foster care 5.8bnMarket for residential learning disabilities and supported living 1.57bnFoster care market across England 1.5%paMarket growth rate 10.1bnNHS/LA total spend on specialist services 1.39bnResidential childrens m
122、arket across UK 1.2%paMarket growth rate Strategic ReviewGovernanceFinancial StatementsCareTech Holdings PLC Annual Report and Accounts 201815OUR BUSINESS MODELOUR RESOURCESOur Business Model represents how we aim to generate revenue and profit from our operations.The Group aims to operate throughou
123、t mainland Britain in England,Wales and Scotland in partnership with local authorities and the NHS,facilitating the outsourcing process,driving value and removing risk.During the period,the Group continued to develop and grow organically four existing operating divisions,which come under the two out
124、come-based sectors of Adult Services and Children Services.These four operating divisions are supported by the Learning Services Division.The growth going forward is underpinned by the strong starting position that we have built carefully over the past few years.We continue to extend both our geogra
125、phic coverage and our outcome-based Care Pathway range of services organically and through the purchase and sale of properties to meet the needs of our marketplace,specifically the requirement for greater acuity service provision.This ensures that CareTech is in a very strong position to address the
126、 demands of our evolving marketplace.The key resources that we require to provide care are:PEOPLE TO PROVIDE CAREStaff and carers who have appropriate skills and qualities to look after children or adults in need of care and who remain fully trained.PEOPLE WITH SKILLS TO MANAGE,TRAIN AND SUPPORT OUR
127、 PEOPLE WHO PROVIDE CARESkilled staff to provide the management and training to our people who provide care.BUILDINGS,HOMES AND LANDThe land and buildings to provide accommodation for residential services or supported living.FINANCIAL RESOURCESFinancial stability to be able to employ the right staff
128、 and to provide the right land and buildings.SETTING OUT OUR KEY STRATEGIC PRIORITIESWe shall continue to improve the quality and scope of our services,increase market share and grow shareholder value.National presenceLEARNINGSERVICESFOSTER CARE ANDFAMILY SERVICESYOUNG PEOPLERESIDENTIAL SERVICESMENT
129、ALHEALTHADULT LEARNINGDIFFICULTIESCareGovernanceCarePathwayExperiencedand committedmanagementStrongbrandSafeguardingCommitteeExtraordinarydays every day16CareTech Holdings PLC Annual Report and Accounts 2018Strategic Report continuedA strategy to drive future growthOUR STRATEGYOur understanding of t
130、he social care market and our relationships with local authority commissioners is vital to our strategy.We are sensitive to the complex financial position that local authorities are in and their need to have trusted business partners who can help them deliver statutory duties efficiently and with ca
131、re.SOCIAL CARE EXPERTISEEmploying numerous qualified and skilled care workers,foster carers,teachers and managers,the CareTech front line teams are supported by a wide range of high level professionals such as social workers,nurses,therapists,psychologists and a skilled Medical Director with oversig
132、ht of all interventions.HIGH QUALITYThe driver for social care is an organisations ability to deliver high quality care,with reliable outcomes at a fair price.We believe that the market has recognised that CareTech offers the best possible balance between quality and value and understands the need f
133、or progressive thinking and innovation to deliver ongoing results.NATIONWIDE LOCATIONSThe CareTech strategy is to offer a strong national presence with local brands and regional service delivery points.This supports development of local relationships while offering the comfort and security of a well
134、 resourced and strong Group.EXCELLENT REPUTATIONThe CareTech brand is strong and our extensive relationships across the UK are robust.This is reinforced by our presence at major industry events where we have been reliable sponsors and commentators.The most effective way that we sustain our reputatio
135、n is by delivering what we promise for the people we support and by treating our staff well.HIGH OCCUPANCYCareTech services are in demand and occupancy has remained high despite fears of local authority austerity impacting referrals.Whats more,the nature of referrals in recent years has been toward
136、the more complex end of the spectrum.CONTINUED GROWTHIt is well known that demographic trends show growth in social care in the foreseeable future.SHAREHOLDER VALUECareTech has delivered sustainable and reliable growth since the day it listed.It has aimed to be a defensible stock even in difficult t
137、imes and for some time has offered a good quality dividend policy.We have every reason to believe that growth will continue and the management team remains enthusiastic about the Groups future.Strategic ReviewGovernanceFinancial StatementsCareTech Holdings PLC Annual Report and Accounts 201817Our KP
138、Is help us to measure the Groups performance against its strategy and objectives.UNDERLYING EBITDA(m)UNDERLYING PROFIT AFTER TAX AND NON CONTROLLING INTEREST(m)UNDERLYING BASIC EPS(p)43.9m(2017:39.9m)26.5m(2017:26.6m)35.07p(2017:38.03p)HOW THIS IS CALCULATEDUnderlying EBITDA is the Earnings before I
139、nterest,Tax,Depreciation for the year excluding non-underlying items such as amortisation of intangible assets which are fully described in note 5 to the Financial Statements.PERFORMANCE THIS YEARThe underlying EBITDA has improved by 4.0m 10%year on year.This reflects the organic growth achieved by
140、the core business which has been in part reduced by the reconfiguration work on some properties,improved margins and acquisitions.HOW THIS IS CALCULATEDUnderlying is the Groups profit after provision for taxation excluding non-underlying items such as amortisation of intangible assets after tax whic
141、h are fully described in note 5 to the Financial Statements.PERFORMANCE THIS YEARThe underlying profit after tax is 0.4%lower than 2017.This reflects the improved underlying EBITDA,but with higher finance charges and an increased tax provision the profit after tax fell slightly.HOW THIS IS CALCULATE
142、DUnderlying basic earnings per share is the profit after tax divided by the weighted number of ordinary shares which are fully described in notes 10 and 11 to the Financial Statements.PERFORMANCE THIS YEARThe underlying basic earnings per share has reduced to 35.07p mainly due to the full impact of
143、the shares issued in March 2017.43.939.937.132.530.72018201720162015201426.526.624.018.316.12018201720162015201435.0738.0338.0331.7931.012018201720162015201418 CareTech Holdings PLC Annual Report and Accounts 2018 Our key performance indicatorsStrategic Report continuedCAPACITYMATURE ESTATE OCCUPANC
144、Y(%)BLENDED OCCUPANCY(%)2,622places(2017:2,534 places)93%(2017:93%)86%(2017:86%)HOW THIS IS CALCULATEDThe Groups capacity is the total number of Adult Service and Children Service places that the Group is able to offer at that date.It is a total including residential care beds,independent supported
145、living accommodation,community support service users and children that foster carers can currently look after.PERFORMANCE THIS YEAROverall capacity has increased by 88 which is a 3.4%increase.Adult Learning new homes increased capacity by 69.There were 69 new beds in Children Services and 50 beds we
146、re withdrawn for reconfiguration.HOW THIS IS CALCULATEDThe Mature Estate Occupancy is the total number of Adult and Children Service users placed in services that were open throughout the year.PERFORMANCE THIS YEARThe ratio has remained unchanged at 93%and reflects the long length of stay that the m
147、ajority of service users have in our services.HOW THIS IS CALCULATEDBlended occupancy is the total number of Adult and Children Service users actually placed as a percentage of the Groups total capacity and so reflects facilities undergoing development and reconfiguration.PERFORMANCE THIS YEARThe ra
148、tio has remained at 86%and reflects the additional beds in reconfigured services brought back into capacity and the reduction in those withdrawn for reconfiguration plus new beds coming into service.NET DEBT(m)147.0m(2017:147.1m)HOW THIS IS CALCULATEDNet Debt is defined in the Groups banking facilit
149、ies and comprises the balance at the year-end for cash and cash equivalents net of bank loans outstanding and finance lease and hire purchase contract monies outstanding to the Groups bankers.It does not include the finance lease obligations as calculated under IAS 17 arising from the ground rent tr
150、ansaction which is not owed to the Groups bankers.PERFORMANCE THIS YEARBank debt at 30 September 2018 was 147.0m which is a reduction of 0.1m from 30 September 2017 of 147.1m.Finance leases with the Groups bankers at the year-end were 4.7m(2017:6.0m)with the decrease due principally to the lease rep
151、ayments net of the new investment in 36 new home vehicles during the year,which take our fleet to 480 vehicles.Net Debt in total reduced by 0.1m between 30 September 2017 and 30 September 2018.2,6222,5342,3192,1162,07420182017201620152014147.0147.1156.4158.5166.12018201720162015201493939393922018201
152、7201620152014868686868620182017201620152014Strategic ReviewGovernanceFinancial StatementsCareTech Holdings PLC Annual Report and Accounts 201819Social care is a long-term contract with the public sector and is inherently free of risk so long as quality is maintained,outcomes are achieved and the pri
153、ce is right.However,social care does carry risks that will always be at the forefront of our minds.The most obvious risk is that a tragedy will occur and that the Company will be held to blame.To date this has not occurred but we take the risk very seriously.Our principal risk management strategy is
154、 to ensure that our staff are recruited well,are trained and supervised properly and are subject to rigorous quality oversight.In addition,we know from experience that processes and documentation must be very carefully observed and constantly reviewed to ensure that it protects service users and pro
155、vides the Company with a defendable position in the case of tragedy.These matters,along with general safeguarding,are subject to intense scrutiny by our in house compliance and quality teams and Board level oversight.Managing risk and mitigating riskSocial care is not a high risk business propositio
156、n but there are several unique factors that could cause difficulties.These centre on the way in which care and support are provided and the reliability of those front line staff who provide it.CareTech approaches these issues with considerable care and diligence,building in quality and training wher
157、ever it is required but also through its established scrutiny protocols and firm leadership.We care a great deal about what we do and have established a reputation for careful management of all those processes that could expose us to risk.We have thoroughly reviewed our operations.The Group trades o
158、nly within the UK and has no foreign exchange exposure.We have limited exposure to nursing staff and the EU labour market.Our primary recruitment is focused on the UK labour market for support staff and the recruitment of new staff is the factor that we are managing and we continue to monitor closel
159、y.In 2017 the Apprenticeship Levy was introduced and we are confident that the Learning Division through DHA is well placed to take full advantage of the new market structure.Our risksAll providers of health and social care are conscious of the need for management vigilance and the requirement to ha
160、ve a thorough commitment to delivering care that is safe and of a high quality.CareTechs approach to quality and safe service delivery is characterised by a mixture of a dedicated compliance team carrying out regular audits of inspection and a commitment to building quality into everything we do.The
161、 market for the provision of social care services continues to be dynamic,presenting both risks and opportunities.The overall number of people needing support will increase,and a smaller proportion of them will be placed into residential services.Those who do need a residential care solution will ha
162、ve more complex needs and are likely to require a wider range of services,including clinical and therapeutic support.Our operational management teams are already focusing on the delivery of high quality care.As we move forward this will become increasingly specialised with the benefit of professiona
163、l qualified care co-ordinators who will prepare and direct personalised care plans within the services.Most service users will be supported in their own homes through domiciliary care or in more formal supported living arrangements.This is a major growth area for care providers and CareTech already
164、has a solid reputation for its high quality and flexible solutions.We are building this to a higher level and refining our organisational structure to build more rapidly on our successes to date.By order of the BoardFarouq SheikhGroup Executive Chairman20 December 201820 CareTech Holdings PLC Annual
165、 Report and Accounts 2018Strategic Report continuedPrincipal risks and our strategic responsePRINCIPAL RISKS1.SERVICE OFFER AND USER NEEDSWe have to create and staff a service offering which matches the needs of the service user and can be communicated to commissioners so it is carefully recorded lo
166、cally at every service in order to reduce the risk of service users moving to other service providers.2.QUALITY AND SAFETYA health and safety breach would impact reputation,brand and compromise the safety of those in our care.This could impact on the demand for our business as well as incur costs to
167、 rectify.We have to provide and deliver safe care of a high quality and the Group utilises Acoura,an independent supplier,to audit and report monthly on Health and Safety matters as well as all RIDDORS(Reporting of Injuries,Diseases and Dangerous Occurrences Regulations)so that all incidents are rec
168、orded and acted upon.3.SERVICE VALUEThe service offer has to be provided to meet the needs of the commissioners at a fair price and this is coming under increased scrutiny as commissioners regularly review value for money so the Group communicates frequently with its commissioners locally.4.REPUTATI
169、ONThe Group has to have a reputation for delivering a service that is good value and takes account of all risks.The Group maintains a Risk Register which includes all key risks,including reputational risk,and how they are mitigated through quality of service and good communication with service users
170、 and Local Authorities and this Risk Register is reviewed monthly.5.GROWTH FUNDINGSo that the Group can keep growing adequate funding has to be anticipated and put in place and the Group ensures that all of its facilities are monitored and reviewed regularly in particular during its Budget and forec
171、asting processes.6.MANAGE DEBTThe level of debt obtained to fund operations and ensure that growth can occur has to be carefully managed and the different forms of leasing and debt are reviewed quarterly when all of the covenants are also reviewed.Strategic ReviewGovernanceFinancial StatementsCareTe
172、ch Holdings PLC Annual Report and Accounts 201821I am pleased to report again on a successful year that reflects the hard work of our management team,the enthusiasm of our staff and the support of our Board.Haroon SheikhGroup Chief Executive Officer22 CareTech Holdings PLC Annual Report and Accounts
173、 2018A strong foundation built over 25 yearsGroup Chief Executives Statement and Performance ReviewOverview The Group has continued to build upon its solid foundations and remains in a strong position to continue as a leading provider of high quality specialist social care services in a large and gr
174、owing UK market which remains fragmented.The Group has also continued to develop through organic growth and reconfigurations and has further strengthened an experienced management team with skilled leaders.In 2017,I was extremely proud with the establishment of the CareTech Charitable Foundation whi
175、ch is devoted to supporting the social care sector.There have been a number of key long-term projects started in the year both in the UK and abroad.This is further discussed in the Corporate Social Responsibility section of the report.There have been a number of staff initiatives to aid retention in
176、cluding the second Sharesave Scheme and a Level 5 in Care Management training scheme for Managers.On 19 October 2018 the recommended acquisition of Cambian by the Group was completed.I would like to take this opportunity to welcome Anne Marie Carrie as Chief Operating Officer,and the whole Cambian s
177、taff team,as well as the 2,000 children who use their services,to the CareTech Group.I strongly believe that the CareTech offerings in learning difficulties and specialist services for adults including residential services and fostering for young people,is highly complementary to Cambians positions
178、in childrens residential care,specialist education and therapeutic fostering.Furthermore,the geographic reach of the services has been broadened,now providing a nationwide network.We are now ideally positioned to better serve local authority partners and communities with an integrated care offering,
179、to provide best value to purchasers and successful outcomes for our service users.Consolidation and creating new opportunitiesCareTech remains at the forefront of social care outsourcing in the UK across both Children and Adult services and,in the year,there has been a further increase in working cl
180、osely with commissioners and regulators.National public policy continues to be a significant driver of local authority commissioning intentions and behaviour.For a number of years,public policy has encouraged greater personalisation of health and social care for adults.Commissioners and leading prov
181、iders are driving change that will mean offering people more choice and control over the care,treatment and support they receive while at the same time maintaining the quality and safety of those services.Our care priorities drive successful outcomes for our service users and follow closely the guid
182、ance from central Government.Our key focus for delivering quality services and positive outcomes is supported by the following key factors:Communication We have open and frank dialogue with our service users,their families and social workers,as well as the Regulators.Independence In our social care
183、and health contracts we aim to help our service users to return to an ordinary independent life.It may be children who can return to their birth families or live independently.It may be adults who we can help on the pathway to recovery following a specialist services breakdown,or acquired brain inju
184、ry or people with learning disability who we can support towards independent living.Housing care and support We know that most people aspire to have a place of their own,employment and ongoing support.We have structured our services,developing new provision and creative partnerships with housing pro
185、viders to enable these aspirations to be achieved whenever possible and we are tailoring training to assist young people and adults leaving our services to gain employment.Self-directed support It is pivotal to Government policy that adults and children receiving social care are fully engaged in the
186、 support that they require.With some adults this extends to the provision of a cash sum enabling them to purchase their care and support directly.CareTech managers have been further reviewing our systems and delivering training throughout the organisation to ensure that we are able to deliver the re
187、quirements of self-directed support.Quality and dignity CareTech has always delivered high quality care in well maintained premises.However,we have never been complacent about this and have undertaken reviews to ensure that we deliver the right quality at a reasonable price.We have also learned a gr
188、eat deal from the experience of our NHS colleagues and developed a Dignity Test to ensure that our front line and administrative staff treat all our clients in ways that promote dignity.Progress in the yearThe year has seen continued progress as the Group concentrates on the introduction of innovati
189、ve new services developed in partnership with local authority commissioners reconfigured from within our existing portfolio of properties or through new properties either purchased or rented for service users for supported living.Overall capacity has increased by 88,with a net 19 in Adult Services w
190、hilst Children Services have added 69 beds in the year principally in 9 services.The Group also continues to realise the benefit of organisational improvements put in place over the past few years.We have continued to strengthen our management structure with further senior appointments planned and t
191、o improve the efficiency of our processes following further investment in new systems which have gone live or we are working on now.We are seeing the benefits of new executive appointments which continue to have a positive impact across the services.Strategic ReviewGovernanceFinancial StatementsCare
192、Tech Holdings PLC Annual Report and Accounts 2018 23New systems were procured during the year for the Groups recruitment and training solutions including e-learning with standard automated reports as well as for maintenance,hosting,data analytics and e-compliance in order to benefit from cutting edg
193、e technology.These improvements have put us in a strong position to benefit from a number of the commissioning opportunities by working in partnership with the NHS and Local Authorities.Care Pathway Range and ServicesThe Groups focus remains the provision of specialist social care through its five d
194、ivisions.This is underpinned by a well-defined range of provisions which meet the commissioner requirements.These services are now even more extensive and focused on providing high quality care and positive outcomes for all of our service users.The Group has continued to develop and grow its existin
195、g five operating divisions,which come under the two outcome-based sectors of Adult Services and Children Services.We continue to extend both our geographic coverage and our outcome-based Care Pathway range of services organically through the purchase of properties to meet the needs of our marketplac
196、e,specifically the requirement for greater acuity service provision for both Children and Young People and Adults.This ensures that CareTech is in a very strong position to address the demands of our evolving marketplace.We remain committed to the growth of residential care solutions for adults and
197、children with the most complex needs and the Group has embraced the development of home-based solutions including foster care where demand for more specialist services remains strong.Our residential care services for children cater for young people with particularly difficult issues and offer a nati
198、onal service;with strong growth seen in the North of England with ROC Northwest which has expanded both in care and educational services.In the year we have purchased properties in Scotland and North West England for both Spark of Genius and ROC Northwest to develop into new services.Our adult servi
199、ces offer a solid and reliable provision across the whole spectrum of service offerings which now includes acquired brain injuries and we see a particular volume demand in the area of supported living,balanced by renewed demand for more specialised residential care solutions.Our strategy is to offer
200、 a bespoke range of options so that we can maintain the Care Pathways that distinguish us from other providers.Overview of progressOur focus during the past year has continued to be further building on the businesses which established the Care Pathways whilst introducing innovative new solutions to
201、meet the challenges faced by care commissioners and then adding newly acquired businesses with complementary offerings.Capacity has increased by 88 places principally because we have continued to reconfigure services and added new beds through acquiring properties.Occupancy levels within our mature
202、services remain at a creditable 93%,or 86%when taking into account our services under development and transition.Much has been written about personalisation and I felt it would be useful to set out our own understanding and commitment to personalisation.Personalisation to us means recognising people
203、 as individuals who have strengths and preferences and putting them at the centre of their own care and support.The traditional service-led approach has often meant that people have not been able to procure the kind of support they need,or receive tailored care assistance.Personalised approaches suc
204、h as self-directed support and personal budgets involve enabling people to identify their own needs and make choices about how and when they are supported to live their lives.Our two business divisions of Adult Services and Children Services comprise the following four Care Pathways and our Learning
205、 Services division.1.Adult Learning DisabilitiesYear to 30 September 2018Revenue101.0m(2017:87.7m)Contribution to Group Revenue54.4%(2017:52.9%)Underlying EBITDA before unallocated costs.27.0m(2017:26.3m)Capacity1,754(2017:1,735)Adult Learning Disabilities provides individually tailor-made solutions
206、 for people living in their own homes,residential care or independent supported living schemes.We can work with clients to deliver self-directed support packages.For some people residential care will continue as the preferred option and we increasingly offer several types of supported living and pac
207、kages of individualised self-directed support to people in their own homes.This includes adult residential care homes,independent supported living and community support services.We have continued to work closely with Local Authority and NHS commissioners and this has helped us to achieve our growth
208、through the past year.We take a long-term view,recognising that change will continue and with this in mind I am pleased to report that redevelopment of some of our long stay residential provision has been a great success over the past year and will continue to meet the changing requirements of commi
209、ssioners and families.The market for high acuity care and the support of people with learning disability is growing year on year.Demand for lower acuity support has been impacted by the cuts in local authority expenditure but this is not an area of activity in which CareTech operates.Conversely,reso
210、urces for those with the highest level of need are being maintained and increased in some local authorities.During the past year we have withdrawn 50 places in services for reconfiguration into new care models and have developed 26 beds through reconfiguration plus an additional 43 beds have been br
211、ought into service.24 CareTech Holdings PLC Annual Report and Accounts 2018Group Chief Executives Statement and Performance Review continued2.Specialist ServicesYear to 30 September 2018Revenue15.3m(2017:15.5m)Contribution to Group Revenue8.2%(2017:9.3%)Underlying EBITDA before unallocated costs.4.4
212、m(2017:3.9m)Capacity214(2017:214)Specialist Services comprise the Adult Mental Health Services and Oakleaf Care(Hartwell).Capacity is unchanged in Specialist Services during the year.The principal reason for the increase in underlying EBITDA is an improved margin.Specialist Services works in partner
213、ships with the NHS to ensure a successful transition out of acute care,delivering pathways to independence.We have an outstanding track record for helping people away from acute care and supporting them in their own homes.The adult services for this Care Pathway include a community-based hospital,ad
214、ult residential care homes,independent supported living and community outreach with some transitional services transferred within the Group.Community Specialist Services has always been a critical but relatively neglected area of social care.However,this is changing as the NHS drives to lower bed ca
215、pacity and accelerated early discharge from acute psychiatric hospital care.The growth of social care is certain and the response by Government to one of the key difficulties is progressing.There has been some progress in the removal of large numbers of learning disabled people from the controversia
216、l“Treatment and Assessment Centres”operating at various locations throughout the UK.CareTech has never operated any centres of this type but we understand that the CEO of NHS England has been tasked with ensuring that these centres are re-provided as a matter of urgency.CareTech is seeking opportuni
217、ties to support the project and to offer a comprehensive solution within its community homes.We are well positioned for expansion in Specialist Services and have a sustainable infrastructure to deliver growth including plans to provide care for women with acquired brain injury in 2019.Strategic Revi
218、ewGovernanceFinancial StatementsCareTech Holdings PLC Annual Report and Accounts 2018 253.Foster CareYear to 30 September 2018Revenue8.2m(2017:8.6m)Contribution to Group Revenue4.4%(2017:5.2%)Underlying EBITDA before unallocated costs.1.9m(2017:1.9m)Capacity301(2017:301)Foster Care provides for both
219、 mainstream and specialist foster care in small supportive groups across England and Wales for children with disabilities.We also provide foster care family assessments in the home rather than in a residential setting.The unchanged capacity and fall in revenue but stable underlying EBITDA in Foster
220、Care is due to the competitive nature of the market as well the change to family assessments in the home.It is also due to capacity being reported on the basis of the children that carers are able to look after rather than the number that they are approved for.This trend is driven by cost considerat
221、ions,where fostering is considerably less expensive than residential care and by perceived quality care factors.It is generally held that fostering in an ordinary family home delivers better quality than any residential setting.However,the rising tide of fostering has been constrained by the challen
222、ge of finding foster carers with the right skill and motivation alongside preference by social workers to place within local authority services rather than the independent sector.In March 2016,63,718 were looked after in foster care in the UK.Over time independent agencies have absorbed a larger pro
223、portion of fostering activity,as local authorities have seen their volumes remain static and their share fall(LaingBuisson Childrens Services Market Report Third Edition 2017).Our Foster Care teams and Young People Residential teams are working closely alongside each other to offer the best outcomes
224、 for Young People.Our market intelligence suggests that most,if not all,independent sector fostering agencies are still experiencing some degree of“hold back”at present.However,the consensus view is that this will not last long and local authorities will inevitably return to progressive outsourcing
225、of foster care provision.Outsourcing is well established in the culture of most local authorities,but the current austerity measures have led a small number of authorities to reflect on the 50%fee premium paid for independent fostering.This disparity of cost can be attributed in part to the fact tha
226、t the most complex and therefore high cost cases are placed in the care of independent providers.However,it is also clear that local authorities fail to undertake a full cost analysis of their in-house provision.Wherever this has been done,outsourcing is demonstrably much better value.Demand for fos
227、ter care has increased overall but we have noted an increasing trend among some local authorities to make provision in-house for all but the most complex children.In our view this is an expensive and unsustainable approach that exposes local authority commissioners to risk.Our own services are being
228、 maintained at an acceptable level.In October 2017 the All Wales Framework for the provision of foster care services outcome was that TLC(Wales)was ranked 1 and was placed in the New Tier 1.Unfortunately,the benefits of this change are taking longer to come through and turnover last year was lower t
229、han anticipated,although the margin improved by over 1%due to tight cost controls.Looking forward,we are training our foster carers with the skills required to manage more complex work and have linked the fostering division with our residential team for children so that we can maintain an effective
230、care pathway.4.Young People Residential ServicesYear to 30 September 2018Revenue58.7m(2017:43.8m)Contribution to Group Revenue31.6%(2017:26.4%)Underlying EBITDA before unallocated costs.17.0m(2017:13.2m)Capacity353(2017:284)A number of children and young people need to live in specialised residentia
231、l services and receive education.As far as practicable we aim to help these children move into a more normalised family style environment.This segment contains childrens residential care homes,which includes facilities for children with learning difficulties and emotional behavioural disorders(“EBD”
232、),and small specialist schools.In December 2015 ROC Northwest was added and gave a further geographic spread to fit between the current Children residential services in Scotland(Spark of Genius and ACAD),North Wales(Branas Isaf)and South Wales(Greenfield)and services in Staffordshire and Yorkshire.I
233、t also strengthened the residential care and education services for young people with complex needs,especially EBD.In the year this segment benefited from new services which have added 69 beds to capacity with additions to Spark of Genius,ROC Northwest and the original Children services.Spark of Gen
234、ius provides significant benefits across the division due to their well-established education facilities across Scotland and North East England which complement the ROC Northwest and Welsh education facilities.In the year the Education capacity increased by 69 to close at 353 young people.At the Lai
235、ng Buisson Awards in November 2017 the winners in Social Care for Childrens Services was ROC Northwest.Children residential services have been growing as our reputation for quality care and support spreads.We are currently developing new beds and places that have been commissioned during the past ye
236、ar.26 CareTech Holdings PLC Annual Report and Accounts 2018Group Chief Executives Statement and Performance Review continued5.Learning ServicesYear to 30 September 2018Revenue2.5m(2017:10.4m)Contribution to Group Revenue1.4%(2017:6.2%)Underlying EBITDA before unallocated costs.0.5m(2017:0.9m)Learnin
237、g Services comprises Dawn Hodge Associates that is a regional provider specialising in the social care sector and was acquired in 2017.This division has been reconfigured and there has been an impairment to goodwill of 2m.However,it is anticipated that the current year will show an improved performa
238、nce once the changes made have taken affect.Their intensive pre-employment,development and apprenticeship programmes use public funds from the Skills Funding Agency to lay the foundations for individuals to achieve their career goals while helping to provide businesses with the vital skills they nee
239、d in their workforce.As well as supporting the workforce,Learning Services has also developed programmes for service users by enhancing the pathways to independent living and employment.Young people leaving care,for example,often do not know where to find the right job opportunities or have the oppo
240、rtunity to access employer-focused training.We can now bridge that gap by supporting young people as they make the transition to adult life.We are also exploring how best to help individuals return to employment after mental illness and to give people with learning disabilities the skills and confid
241、ence to gain employment so that they are able to live more independently.Progress has been made in identifying the potential for Learning Services to add value to CareTechs attraction and recruitment of staff and their retention,helping new employees gain the skills and qualifications to grow a succ
242、essful career in care through an apprenticeship.The Aspire programme developed as a unique and innovative scheme that will ensure all CareTechs support workers receive mandatory and statutory training to the highest standard whilst also being offered the opportunity to complete a Level 2 or Level 3
243、apprenticeship which has been carefully tailored to suit their role and 140 completed this apprenticeship in the last academic year.CareTech apprentices continue their training with 266 CareTech support workers undertaking the apprenticeship programme.The Team Leader programme has 22 staff members o
244、n Level 5 programmes.In early 2016 Dawn Hodge Associates retained its Ofsted“Outstanding”which is an achievement that we are very pleased to have attained and provides an excellent base to build upon.During 2017 with the introduction of the Apprenticeship Levy there have been significant changes to
245、the Learning sector,but we believe that we are well placed to take advantage of the new market conditions.However,the Learning Service Division faced a challenging start to the new Learning sector year.A reorganisation of the management of the division was undertaken and the budget for the rest of 2
246、019 is expected to show an improvement on last year.Acquisition of CambianAs we have outlined in the prospectus the two businesses will be run with the CareTech and Cambian brands retained and with no material change to CareTechs or Cambians current operational sites.Over the coming months a dedicat
247、ed plan to review the two businesses will be undertaken with limited disruption to the underlying operations of each business.Within the enlarged Group the CareTech operations come under John Ivers,Chief Operating Officer of CareTech.Anne Marie Carrie leads the Cambian operations as Chief Operating
248、Officer of Cambian and both John and Anne Marie report to me as Group Chief Executive Officer.I am looking forward to utilising fully the operational expertise across the enlarged Group which will enable the creation of a robust and sustainable operating model to better serve local authority partner
249、s and service users.The combined operational expertise will be able to deliver strong service user outcomes,implement positive staff engagement and improve care quality.In particular,through the combination,Cambian should be able to leverage CareTechs highly developed recruitment and retention funct
250、ions,which have contributed to CareTech achieving staff turnover rates of 22.5%which I believe is substantially better than the sector average.There is also the opportunity for CareTechs Learning Services division,which assists young people in obtaining employment opportunities and apprenticeships,t
251、o augment Cambians service and care pathway.OutlookThe coming year shows every sign of being good for health and social care providers and especially for those with an established reputation for quality and innovation.This year there has been significant policy development and we see some indicators
252、 that local authorities have recognised the need to maintain,or grow,their social care budgets.May I also take this opportunity to welcome all staff who have joined the CareTech family and also I would like to thank all of the staff teams across the Group for their hard work and commitment during th
253、e past year.Haroon SheikhGroup Chief Executive Officer20 December 2018Strategic ReviewGovernanceFinancial StatementsCareTech Holdings PLC Annual Report and Accounts 201827We have continued to strive for long-lasting improvements in our services in a way that is consistent with the interests and conc
254、erns of our stakeholder community.As always,the driving force underpinning CareTechs operation continues to be the provision of the highest quality of care to our service users.Established during 2017,the CareTech Foundation is an independent grant-making corporate foundation registered with the Cha
255、rity Commission.Funded and founded by the Group,the Foundation has an independent Board of trustees responsible for delivering its Charitable Objects.The Foundation has ambitious and clear-sighted objectives to deliver meaningful impact to communities in the UK and overseas about which the staff of
256、the Group and its service users feel proud and strongly engaged,providing a unique contribution to the charitable marketplace consistent with the Groups values and approach.In the year to September 2018 the Group made charitable donations through the Charity Foundation of 380,000(2017:4,970).The Car
257、eTech Foundation is the first corporate foundation in the UK social care sector,demonstrating the Companys commitment to wider society and to its staff and its desire to play a strong leadership role within the social care sector.The CareTech Charitable Foundations work is focused on the following t
258、hree key objectives:1)Physical and learning disabilities and Specialist Services.Supporting disabled people and those with long-term health difficulties,including those with Specialist Services conditions and complex physical and learning disabilities.2)Skills development for the care sector.Skills
259、development for those from deprived and disadvantaged backgrounds for careers in the care sector.3)Supporting our communities and the CareTech family.Developing an ambitious corporate social responsibility programme in partnership with the Group,supporting the family and friends of the Groups staff
260、facing significant financial,health or similar challenges.The Foundations focus is devoted to supporting those in need in the UK and in developing countries overseas.The CareTech Charitable Foundation delivers its key objectives through the following key approaches:Partnership Grant-giving.The CareT
261、ech Charitable Foundation supports a small number of significant partnerships with credible and high-quality charities and social enterprises consistent with its three key objectives.To be considered for the Foundations support,any partnership must:Involve medium to long-term investments in innovati
262、ve and high-impact programmes that will deliver one or more of the Foundations objectives.Demonstrate and be contingent upon any investment by the Foundation leveraging additional investment.Enable the Foundation to provide wider in-kind support through the expertise of the Groups staff,supply chain
263、 and wider network.Responsible Business.Strengthening the Groups strong track record in recognising its responsibilities to the environment and communities in which it operates,the Foundation is funded to bring together and enhance the Companys responsible business activities.In particular,the Found
264、ation seeks to mobilise a significant staff volunteering programme,building a portfolio of high-quality and credible opportunities available to staff and relevant to the skills of the business staff and the local communities in which the Group operates.Match-funding.The Foundation provides match-fun
265、ding to CareTech staffs individual fundraising efforts for charitable causes in line with the Foundations Charitable Objects.Family&Friends grants.Modest funding support will be available through the Foundation to support the family and friends of CareTech staff facing significant challenges over th
266、e above that properly covered by virtue of staff members employment contracts.We care about our service usersService users are the reason for our existence and satisfying their needs remains our key objective.As our organisation grows,we strive to maintain a culture which never forgets the important
267、 relationship we have with our service users.We seek to nurture these relationships and see them as partnerships of mutual interest and respect,with our person-centred approach ensuring service user interests are safeguarded and vulnerabilities minimised.The further expansion of our Care Pathway str
268、ategy seeks to provide our service users with“whole of life”solutions to their needs,maximising independence where possible by encouraging education,promoting choice,being proactive with family members,providing training for employment where feasible and nurturing personal ambition where helpful.In
269、the year we have been celebrating the achievements of our service users across the country,they have been busy creating art pieces for an Art Competition and the finalists are having another series of local awards presentations with a national presentation in November 2018 following the successes in
270、 2015,2016 and 2017.We are determined to preserve the dignity of those we care for and fully support Government initiatives to this end.We see making each day as fulfilled as possible for our service users as a vital ingredient to their,and our,success.We care about the environmentWe seek to maximis
271、e environmental standards in all areas of our organisation.Energy costs are now more closely monitored centrally and with the installation of smart meters in our services we are encouraging more efficient consumption of energy,without compromising service user care.Clinical waste management has an e
272、nvironmental impact and we are focussed on ways to make this more effective whilst still adhering to statutory requirements.28 CareTech Holdings PLC Annual Report and Accounts 2018Corporate Social Responsibility We aim for minimal waste production and waste-free processes.Encouraging the involvement
273、 of our workforce in seeking new ways to“be green”is important and we are striving to reduce our carbon footprint in all commercial areas including promoting recycling initiatives,developing a carbon offset scheme for paper usage,using public transport where feasible and improving our energy efficie
274、ncy.We care about our staffWe remain committed to ensuring employees share in the success of the Group and fully appreciate that Group performance is affected by the relationship we have with them.Sustaining the retention and development of employees is also critical to our continued success and we
275、remain of the belief that fostering a positive workplace culture is the best way for our employees to thrive.Supporting them with regular supervision,training and clear career development programmes promotes staff continuity and leads to improved standards of care quality.In early December 2015 we h
276、eld our first staff awards ceremony with 10 categories for staff and staff teams across each Division.Large events were held in November 2016 and 2017 and the fourth care awards ceremony was in November 2018.Out of a total of 5,560 staff at the end of September 2018,69%are female and equal opportuni
277、ty for all remains at the heart of our recruitment policies and the diversity of our workforce bears this out.We value our staff at all levels and work closely with them through our robust human resources department to foster consultation in all matters,ensure fair pay for all,maximise conditions of
278、 service and facilitate flexible working where feasible.The Staff Engagement Survey which took place in 2017 involved all staff and looked at values and questions across five engagement drivers.The feedback has led to a Communication Plan that will lead to improved communication across the Group.We
279、have a team of in-house training staff delivering courses on all relevant subjects,enabling our workforce to gain the skills,knowledge and confidence to provide the care and support to our service users on a daily basis.Our Sharesave share option scheme had been launched in March 2016 with a plan to
280、 offer new invitations regularly and to be available to all our employees.Over 200 staff participated in the 3 year scheme launched in 2016.We have repeated the sharesave option scheme in October 2017 with a further 259 staff participating in the new 3 year scheme.It is proposed to launch another sc
281、heme in early 2019.This participation,along with regular senior management share option awards,contributes to the fulfilment of our desire to reward staff for loyalty,diligence and commitment to high standards of service.We care about quality and safetyAs a Group,our aim is to provide a safe working
282、 environment for service users,staff and visitors.We value the well-being of all stakeholders and develop policies to this end.Maintaining workplace infrastructures is a core objective and sustained investment in Information Technology,furniture,facilities and equipment enable working environments,b
283、e they operational or administrative,to be safe and productive.Regulation is vigorously applied with routine and regular inspections being made by the Care Quality Commission(“CQC”)and Ofsted in England and the services are regulated by the Care and Social Services Inspectorate Wales(“CSSIW”)in Wale
284、s and by the Care Inspectorate for Scotland.We continue to resource our own highly experienced internal quality and compliance teams which undertake a programme of regular inspection and assessment and give constructive feedback backed by training and supervision if the requirement is there.We engag
285、e the services of outsourced expert advisers ensuring best practice and procedures are maintained.We care about our communitiesDoing business the right way is of fundamental importance to us.A successful business needs to operate in healthy,thriving communities and needs to be seen as a good neighbo
286、ur to those communities.We have direct involvement in a variety of community-based programmes further improving our service reputation and helping to foster a strengthened relationship with local authorities.Being a socially responsible organisation with a focus on developing our ethical standards a
287、ligned with our economic objectives remains a core aim and we strive to identify the real value of our organisation,beyond its financial bottom line.Considering non-financial values such as reputation,employee commitment and service user fulfilment helps us develop longer-term opportunities,ultimate
288、ly adding to the financial bottom line.Behaving responsibly and maximising the benefits of a strong relationship with our stakeholders is an integral part of a continuing process of building long-term value.OutlookThe coming year shows every sign of being good for health and social care providers an
289、d especially for those with an established reputation for quality and innovation.This year there has been significant policy development and we see some indicators that local authorities have recognised the need to maintain or grow their social care budgets.In our view we are in a period in which co
290、nsolidation will again feature strongly within the corporate sector and we are alert to quality opportunities that may arise.However,we are mindful about acquisition and have robust criteria which must be satisfied to ensure that any acquired business fits our long-term strategic objectives.This has
291、 been another progressive year for CareTech and I am indebted to the strong management team who have overseen the provision of diligent and tailored services in what has been a challenging environment for the care sector.CareTech provides high quality care,support and outcomes to our service users.I
292、 remain proud to lead the Group,delivering a quality of care that makes a difference to so many lives.Haroon SheikhGroup Chief Executive Officer20 December 2018Strategic ReviewGovernanceFinancial StatementsCareTech Holdings PLC Annual Report and Accounts 2018 29I am delighted that this year marks Ca
293、reTechs 25th year in business looking after service users.In October 2018,after the year end,the Group completed the acquisition of Cambian and also has put in place new banking facilities to provide stability for the coming years.The results reported are for the CareTech operations only and in 2019
294、 the results will reflect the enlarged Group including the Cambian operations.ResultsUnderlying operating profit improved by 10.5%at 37.8m compared with 34.2m last year.Until 2013 the Group had been making strategic acquisitions to gain market share and extend the Care Pathway range of services.Sinc
295、e 2013 the focus had been on both organic development and cost efficiencies as well as acquisitions.With two share placements,improved banking facilities and a Ground Rent fund transaction the Group has raised 87m which has been used for acquisitions with five completed in the last four years.Underl
296、ying basic earnings per share are 35.07p(2017:38.03p).In the year underlying profit before taxation increased by 11.9%to 32.9m and underlying profit after tax has risen by 1.9%to 27.1m(2017:26.6m)due in part to the increase in the effective tax rate.The weighted average number of diluted shares rose
297、 to 75.7m(2017:70.1m)being an increase of 8.0%.Basic earnings per share decreased by 44.8%to 14.07p(2017:25.48p)and profit after tax reduced by 40.4%to 10.6m(2017:17.8m).Cash inflows from operating activities before tax and non-underlying items paid were 39.1m(2017:32.7m),an increase of 19.6%.Net de
298、bt to the Groups bankers(as defined on page 1)at the year end of 147.0m has reduced by 0.1m for the year(2017:147.1m).The Condensed Income Statement before non-underlying items for the year is summarised in table 1.RevenueRevenue of 185.7m(2017:166.0m)was 11.9%higher than in 2017.In the established
299、Adult Learning Disabilities segment we continued to experience high levels of occupancy and reported 86%occupancy at 30 September 2018.When this is blended with the facilities that are being reconfigured and so are under development,the overall occupancy level during the second half of the year and
300、at 30 September 2018 was 86%of capacity(September 2017:86%).As in recent years the demand for residential services continues to be encouraging for high acuity users.As set out in the Chief Executives statement and note 4 to these accounts,we are again reporting segmental information for the financia
301、l year and last year,which includes information on client capacity and revenue for each segment.The continued development of our care pathways and a growing range of service options has led to the proportion of Adult Services revenue rising from 62.2%in 2017 to 62.6%in 2018 and underlying EBITDA bef
302、ore Group costs moving from 65.3%in 2017 to 61.8%in 2018.The Young People Residential Services total revenue has risen by 34%with Specialist Services falling by 1.1%,Foster Care falling by 4.7%and Learning Services by 76%.Their total proportion of the EBITDA before Group costs has moved from 34.6%in
303、 2017 to 38.2%in 2018 due mainly to the new services opening in the Young People Residential Services.Underlying EBITDA and total EBITDAUnderlying EBITDA has grown by 10%from 39.9m in 2017 to 43.9m in 2018.Underlying EBITDA margin has decreased from 24%to 23.6%mainly due to the margin in the total o
304、f the acquired businesses being at a lower rate than the other businesses,and the growth in services businesses that require little capital expenditure like Foster Care and the Learning Division.The Adult Learning Disabilities,Specialist Services and Young People Residential Services segments have h
305、igher margins but normally require considerable capital expenditure to increase capacity,whilst Supported Living,Foster Care and Learning Services operate at a lower margin in part because they do not require capital expenditure to increase capacity and are not reliant on the Groups properties.Admin
306、istrative expenses,before depreciation and share-based payments charges,were 21.4m(2017:20.0m)and increased by 1.4m during the year.In 2017 they represented 12.0%of Group revenue and in 2018 this reduced to 11.5%of Group revenue.There has been a further considerable effort in the year to tighten adm
307、inistrative expenses with further back office systems centralisation and procurement successes for the Group.The reconfiguration of services is a central part of the Boards strategy to grow organically.It enhances average fee rates and maintains the Groups reputation as a provider of highest quality
308、 of care.In the year there has also been a continued focus on purchasing properties which are then converted to new services.The number of employees in management and administration has reduced by 40.The Time and Attendance system has been implemented across all of the residential services in the ye
309、ar which will further our back office centralisation and ensure that staff are paid more accurately and quickly,as well as giving reliable data on staff rotas and attendance in each service.A new integrated Recruitment system has been implemented in the year.Total EBITDA has increased from 36.4m in
310、2017 to 40.2m in 2018.30 CareTech Holdings PLC Annual Report and Accounts 2018The Group has continuedto make good progress in 2018Group Financial ReviewTable 1 Condensed Income Statement before non-underlying items2018m2017 mGrowthRevenue185.7166.011.9%Gross profit65.359.9Administrative expenses exc
311、luding depreciation and share-based payments(21.4)(20.0)Underlying EBITDA43.939.910.0%Underlying EBITDA margin23.6%24.0%Depreciation(5.9)(5.5)Share-based payments charge(0.2)(0.2)Underlying operating profit37.834.210.5%Net financial expenses(4.9)(4.8)Underlying profit before tax32.929.411.9%Underlyi
312、ng taxation(5.8)(2.8)Underlying effective tax rate17.5%9.3%Underlying profit for the year27.126.6Non-controlling interest(0.6)Weighted average number of diluted shares(millions)75.770.1Underlying basic earnings per share35.07p38.03pFull year dividend per share11.00p9.90pTable 2 Revenue2018Revenuem20
313、18UnderlyingEBITDAm2017Revenuem2017UnderlyingEBITDAmAdult Learning Disabilities101.027.087.726.3Specialist Services15.34.415.53.9Adult Services116.331.4103.230.2Young People Residential Services58.717.043.813.2Foster Care 8.21.98.61.9Learning Services2.50.510.40.9Children Services69.419.462.816.0Les
314、s unallocated Group costs(6.9)(6.3)185.743.9166.039.9Strategic ReviewGovernanceFinancial StatementsCareTech Holdings PLC Annual Report and Accounts 201831Total non-underlying items represent a net charge of 17.6m at operating level(2017:11.5m)and the principal items are the amortisation of intangibl
315、e assets and integration and reorganisation costs plus costs of the acquisition.Cash flow and net debtThe cash flow statement and movement in net debt as defined on page 1 to the Groups bankers for the year is summarised in table 3.Net debt to the Groups bankers at 30 September 2018 of 147.0m(2017:1
316、47.1m)has decreased by 0.1m during the financial year,with an investment of 17.1m in acquisitions and capital improvements during the year.DividendsOur policy has been to increase the total dividend per year broadly in line with the movement in underlying diluted earnings per share.The final dividen
317、d will rise in line with the increase in underlying operating profit and increase to 7.5p per share(2017:6.60p),bringing the total dividend for the year to 11.00p(2017:9.90p),a growth of 11.1%.Dividend cover for 2018,based upon diluted earnings per share before non-underlying items,is 3.19 times(201
318、7:3.84 times).Non-underlying itemsAs fully explained on the face of the Consolidated Statement of Comprehensive Income and in note 5,the Directors have separately disclosed a number of non-underlying items in order to improve understanding of the underlying trading performance achieved by the Group.
319、Operating profit and profit before taxThe depreciation charge is 5.9m(2017:5.5m)and reflects the investment in land and buildings,motor vehicles and fixtures,fittings and equipment.After this charge and the share-based payments,underlying operating profit grew 10.5%to 37.8m(2017:34.2m).Total operati
320、ng profit reduced by 2.5m to 20.2m(2017:22.7m).Net underlying financial expenses increased to 4.9m(2017:4.8m)due to additional finance leases taken out on new home vehicles during the year.Underlying profit for the year improved to 27.1m(2017:26.6m).Total profit before tax decreased by 8.4%to 15.4m(
321、2017:16.8m).Taxation and diluted earnings per shareThe effective underlying tax rate was 17.5%(2017:9.3%)and reflects managements expectations of future capital investment through organic developments and reconfigurations relative to available capital allowances and the impact of the reduction in th
322、e main rate of corporation tax in the year,whilst last year also had the release of a provision for tax no longer required.The weighted average number of shares in issue rose by 8.1%mainly due to the share placement in March 2017.The underlying basic earnings per share fell to 35.07p in 2018 from 38
323、.03p in 2017.Basic earnings per share reduced by 44.8%to 14.07p(2017:25.48p).Table 3 Cash flow and net debt2018m2017 mUnderlying EBITDA 43.939.9(Increase)in working capital(4.8)(7.2)Cash inflows from operating activities before non-underlying items39.132.7Tax paid(4.1)(6.3)Interest paid(4.7)(5.0)Div
324、idends paid(7.5)(5.9)Acquisitions and capital expenditure(17.1)(36.4)Share placement37.4Cash flow before adjustments5.716.5Non-underlying cash flows including derivative financial instruments(5.6)(7.2)Movement in net debt to the Groups bankers0.19.3Opening net debt to the Groups bankers(147.1)(156.4
325、)Closing net debt to the Groups bankers(147.0)(147.1)32 CareTech Holdings PLC Annual Report and Accounts 2018Group Financial Review continuedPost Balance Sheet eventsIn October 2018 there were a group of related post Balance Sheet events.There was the acquisition effected by way of a Court Sanctione
326、d Scheme under Part 26 of the Companies Act whereby the Group became the holder of the entire issued and to be issued share capital of Cambian Group plc.The acquisition completed following the Admission of the Enlarged Share Capital to trading on AIM on 19 October 2018.The Headline Offer for each Ca
327、mbian share was 100p in cash and 0.267 of a new CareTech share;alternatively the Full Cash Alternative for each Cambian share was 190p in cash.The majority of the Cambian shareholders took the Headline Offer and so became shareholders in the enlarged Group with 33.2m new shares in the Group being is
328、sued.There was also the financing of the acquisition which is discussed above.OutlookThe Group is now in a better position than ever before to continue its growth as a pioneering provider of specialist social care services in a UK market which is continuing to grow yet remains fragmented.Farouq Shei
329、khGroup Executive Chairman20 December 2018In addition to the term loans and bridge loan,a 25m revolving credit facility is available to provide working capital for the enlarged Group and an uncommitted accordion facility of up to 30m for general corporate and working capital purposes(including acqui
330、sitions).The new facilities of the term loans and bridge loan with an aggregate size up to 414m have been utilised for the cash consideration of the acquisition,following the repayment of the Groups existing bank debt facilities of approximately 150m and the payment of debt financing fees of up to a
331、pproximately 6m.The amount available for the draw down under the term loans was reduced in the event that the actual cash consideration payable under the transaction was less than 253m.As part of the acquisition,in September 2018 the Groups property portfolio was revalued by Cushman and Wakefield an
332、d the market value was 424m.The Cambian Group plc property portfolio was revalued by Knight Frank and the market value was 350m.Following completion of the acquisition,Lloyds Bank plc and Nat West Markets plc,who had underwritten the funding,completed the syndication of the Term Loans and revolving
333、credit facility successfully.The syndication was significantly oversubscribed showing strong support for both the Group and the acquisition.The final facility is a term loan of 322m and revolving credit facility of 25m to a group of banks comprising Barclays Bank PLC,HSBC UK Banks plc,Santander UK plc,AIB Group(UK)plc,Clydesdale Bank PLC and Credit Suisse AG,in addition to Lloyds Bank plc and Nati
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