Acquisition of fostering business

CareTech Holdings PLC

("CareTech" or "the Group" or "the company")

Acquisition of fostering business from Care UK and purchase of Acquired Brain Injury ("ABI") business

CareTech (AIM: CTH), a leading UK provider of specialist social care services is delighted to announce the acquisition of the whole of Care UK's children's fostering operations for £2.8m. The fostering service has been a part of Care UK for over five years and has established a reputation for providing high levels of support for the local communities of foster carers that it has created. With a good OFSTED rating the business currently has 74 placements across London, the South East and Shropshire. The Directors believe that integrating this business into CareTech's larger foster care operation will significantly improve the outlook for all of its staff, carers and service users.

CareTech is also pleased to announce the investment in Phoenix Therapy and Care Ltd ("Phoenix"). Phoenix, based near Edinburgh, was established in 2003 and operates throughout Scotland providing services to 14 individuals with spinal or brain injuries. The business also has an encouraging number of potential referrals and is rated as very good by the Care Commission. The acquisition, whilst relatively small, is an exciting development for CareTech as it extends our care pathway range of services into ABI for the first time whilst also being the first activity of the Group in Scotland.

The acquisition of Care UK's fostering business is firmly in line with the Group's strategy of consolidating the fragmented fostering services market. The acquisition of Phoenix presents the Group with an exciting platform which it can use to consolidate the ABI market in the same way that CareTech built its presence in Learning Difficulties and Families & Young People. Phoenix also provides a gateway for CareTech in Scotland where it intends to offer its range of services.

Farouq Sheikh, Executive Chairman commented:

"We are delighted to have extended our care pathway range of services into ABI through the acquisition of Phoenix. The acquisition of Care UK's fostering operations continues our strategy of market consolidation and complements CareTech's existing offering of fostering services. We have put in place a focused approach to manage the growth opportunities available to the Group in our chosen market of specialist social care."

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