Claimar Care
ADDClaimar, the domiciliary care services company enthusiastically backed by GCI at 76.5p last year, has completed its ninth and biggest acquisition to date, paying £10.25m for Acorn Home Care.
This profitable business operates within the group’s Midlands and North of England sweet spot and delivers more than 14,000 care hours per week from 14 branches, seven of which overlap with existing group branches. The acquisition, by far the largest since Claimar’s debut on AIM in January 2006 and a deal financed through funds raised in a £7m March placing as well as increased bank facilities, takes the number of local authorities contracting with the group under long-term deals to 40, further enhancing earnings visibility.
Chief executive Mark Hales predicts margin benefits to rise through operational cost benefits and economies of scale, with good branch savings already identified. Though Claimar will have to invest to support contracts recently won by Acorn, the acquisition should boost earnings in the year to September 2008 and Hales remains in talks on further deals in a hugely fragmented sector consolidating around those larger players able to provide the care hours capacity demanded by local authorities, a trend squeezing out smaller players.
Following the deal, forecasts for the year to September from house broker Arden Partners remain unchanged, with pre-tax profits expected to swell from £1.3m to £2.1m. For 2008, investors might expect pre-tax profits of £3.3m, upgraded from £2.8m, and earnings of 7.7p, placing the shares on a 2008 multiple of 19.5, undemanding given growth rates and the scope for further savvy acquisitions. Add.
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Market cap: £45.3m
PE Forecast: 26.4
Share price: 150.5p
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