CAMBIAN GROUP PLC We set ourselves an ambitious plan for 2015, targeting substantial headline revenue and EBITDA growth. The Group's overriding focus is to provide high quality services to those placed in its care. Operationally, our objectives were to open in excess of 300 new places, hire and train the required staff and to invest in our business to position it for significant growth both organically and through acquisitions.
On 22 October 2015, the Group indicated that adjusted EBITDA for the year to 31 December 2015 would be not less than £49m. Cambian now expects that, subject to audit, revenue and adjusted EBITDA for the year will be approximately £292m and £46m respectively. During the year ended 31 December 2015 occupancy increased by approximately 260. Since the previous announcement, revenues and wages have been broadly in line with expectations, but due to weaknesses in our cost management processes, it took longer to identify and manage down other costs.
In response to these disappointing events, which have significantly impacted the second half of the year, we have taken a number of immediate steps to improve our performance and bring costs and capital expenditure in line with Group revenue, as follows:
Having deployed approximately £46m in capital expenditure in 2015 adding an additional new 368 places, our focus in 2016 will be upon increasing occupancy in the existing estate. In order to facilitate this, we have restructured our central HR function and created a regional servic e centre reporting to the operational divisions to enable greater coordination between staff deployment and the recruitment pipeline. We have improved induction processes and redesigned training programmes to enhance staff capabilities.
During the course of 2015, significant costs were built up in order to support our growth strategy. Considerable steps have also been taken in strengthening our controls to ensure that costs, and in particular non-staff costs, are appropriately managed, taking into account the rate of growth in revenue. We have appointed PwC to conduct a review of our supplier management systems.
Capital expenditure will be reduced to approximately £20m in 2016, which is considered the minimum necessary to build out our existing facilities and to maintain the quality of our premises.
As previously announced, Andrew Griffith, the CFO, will be leaving the business and we have hired an experienced interim CFO, Martin Hopcroft. A search to find a permanent CFO is well underway.
The Group's audited results for the year ended 31 December 2015 will be announced on 26 April 2016. In light of these results, the Board will not be recommending the payment of a final dividend for 2015.
Current trading and guidance for year to 31 December 2016
The Group has had a satisfactory start to 2016. Demand continues to be strong for the specialised services which we provide and we are confident that we shall be able to increase prices in line with the net cost of the National Living Wage introduction on 1 April this year.
We anticipate we will deliver modest growth in adjusted EBITDA for the year ending 31 December 2016, reflecting a lower first half result, with improving revenue momentum in the second half.
Group net debt as at 31 December 2015 was £241m. The Group traded within its bank covenants at that date and are entering into discussions with its lending banks to agree revised future covenants . The Board is confident that it will achieve a satisfactory outcome, given its trading outlook and the substantial value of its mainly freehold properties which were valued at approximately £577 million by Knight Frank LLP at the time of its IPO in April 2014.
There will be exceptional items relating to the cost-cutting and realignment of the business in both the year ended 31 December 2015 and in the current year ending 31 December 2016. These are estimated to be £3.5m in 2015.
Christopher Kemball, Chairman commented:
"It is very disappointing to announce a further revision of expectations for the year to 31 December 2015. However, we now have taken the significant remedial actions outlined above and we are already seeing the benefits.
"We believe that Cambian is fundamentally a good business with an exciting future. To realise its potential, though, we must first refocus the core business before returning to our growth agenda."
There will be a conference call for analysts and investors at 08:30 am today, Tuesday 9 February. Please call James Gray at Instinctif Partners (+44 (0)20 7866 7856) or e-mail james.gray@instinctif.co m for details.
Saleem Asaria, Chief Executive Martin Hopcroft, Interim CFO
Mark Garraway James Gray
The Cambian Group is one of the UK's leading specialist behavioural health service providers. Founded in 2004, it has grown to become a significant partner to the UK Government. The Group's services have a specific focus on children and adults who present high severity needs with challenging behaviours and complex care requirements. Cambian employs approximately 7,000 people across a portfolio of over 300 purpose-designed facilities and 10 fostering offices located in England and Wales.
Cambian Group plc issued this content on 09 February 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 09 February 2016 09:44:33 UTC
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