Acquisition

CareTech Holdings PLC

("CareTech" or the "Company")

Acquisition

CareTech Holdings PLC (AIM: CTH), a pioneering provider of specialist social care services in the UK, is pleased to announce that it has agreed to acquire the entire issued share capital of ROC North West Limited and all of the children's residential properties from which it operates ("ROC"). ROC is a North West based provider of residential care and education services for young people with complex needs. The total consideration for ROC is up to £11.425 million, comprising a net initial cash payment of £8.725 million and an earn-out of up to £2.7 million payable as described below.

ROC provides residential care and education for challenging and vulnerable young people with complex needs. It has established a model of therapeutic care and education which has generated over the past few years a history of high regulatory grades across its services.

ROC currently has a capacity of 41 residential places in 7 residential homes in Lancashire and 25 education places in its school in Preston.

ROC was established in Lancaster in 2005 by its founding directors, Hilary Waterhouse and Glyn Waterhouse, and has grown profitably since. ROC's senior management team will continue in their roles at CareTech, driving forward the quality of services for children. In the year ended 31 July 2014, ROC reported revenues of £5.0 million and profit before rent and tax of £0.802 million. In the year to July 2015 two new services were added and are now fully operational which has increased both revenue and profitability going forwards.

ROC is a strong geographic fit with the current Children's Residential Services in Scotland (Spark of Genius and ACAD) and North Wales (Branas Isaf) and services in Staffordshire and Yorkshire.

The acquisition of ROC, which is expected to be immediately earnings enhancing, will be financed from the existing resources of the Company and it utilises the remainder of the net proceeds from the Group's share placement in March 2015.

Hilary Waterhouse, Co-founder of ROC, said: "ROC is a family run business offering high standards of care and education in the learning disabilities sector. We are pleased that we have now joined the larger family of CareTech. We had a number of different companies wishing to buy our business but chose CareTech as we believe in their philosophy of care and working practices that mirror our own expectations and high standards."

Farouq Sheikh, Executive Chairman of CareTech, commented: "We are delighted to announce the acquisition of ROC whose impressive growth in the past few years reflects the quality and innovation of its services and the strength of its local authority relationships. This business complements very well our existing Children's Residential Services and I would like to welcome the team at ROC to CareTech."

"This acquisition, which is expected to be immediately earnings enhancing, marks our third transaction utilising the whole of the £21 million gross placing in March this year within 9 months."

Earn-out consideration

Of the consideration payable under the earn-out, £275,000 was settled on completion of the acquisition through the issue of 100,000 ordinary shares in the capital of the Company ("Ordinary Shares") at a price of 275 pence per Ordinary Share. The remainder of the consideration under the earn-out of up to £2.425 million will be determined with reference to ROC's EBITDA performance over the period to July 2016 and will be funded from current cash reserves.

Application for admission to trading on AIM and total voting rights

Application will be made to the London Stock Exchange for 100,000 new Ordinary Shares to be admitted to trading on the AIM Market of the London Stock Exchange, which is expected to occur on or around 7 December 2015. The new Ordinary Shares rank pari passu in all respects with the existing Ordinary Shares in issue, including the right to receive dividends.

On admission, the Company's enlarged issued ordinary share capital will consist of 62,233,535 Ordinary Shares. All of these Ordinary Shares carry voting rights of one vote per Ordinary Share. There are no Ordinary Shares held in treasury and so the total number of voting rights in the Company following admission will be 62,233,535. The above figures should be used by shareholders following admission as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the Financial Conduct Authority's Disclosure and Transparency Rules.

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About CareTech

CareTech Holdings plc is a leading provider of specialist social care services, supporting adults and children with a wide range of complex needs in more than 250 specialist services around the UK.

Committed to the highest standards of care and care governance, CareTech provides its innovative care pathways through five divisions covering adult learning disabilities, mental health, young people residential services, foster care and learning services.

CareTech, which was founded in 1993, began trading on the AIM market of the London Stock Exchange in October 2005 under the ticker symbol CTH. Its freehold portfolio comprises more than 160 properties.

For further information please visit: www.caretech-uk.com.