Full Year Trading Update

CareTech Holdings PLC

("CareTech" or "the Group")

Full Year Trading Update

CareTech Holdings PLC (AIM: CTH), a pioneering provider of specialist social care services in the UK, is pleased to announce its year end trading update ahead of its results for the year ended 30 September 2013.

The Board is pleased to report on a positive performance and that trading for the year will be in line with expectations, reflecting the strength of the Group's underlying business and the success of its innovative new services developed in partnership with care commissioners.

Momentum in the Group's trading performance is expected to be underpinned in the current year by the earnings-enhancing acquisition towards the end of the 2013 financial year of the freeholds to two property portfolios previously leased by the Group. It is expected that the acquisition will save the Group substantial cost in rental charges.

The rent saving in 2014 will be up to £4.4m, compared with interest payments associated with the acquisition of the properties of £1.6m. The rent saving is expected to increase in future years as the previous rental terms were subject to increases based on inflation. The extent to which rent savings will be reflected in the Group's profitability is dependent on the extent of reconfiguration work that the Group carries out at the properties.

During the financial year, the Group refined its measurement of capacity levels. For example, in fostering the Group previously used the number of children a carer was registered to foster whereas now it uses the number of children a carer is willing to foster; at any given time this number is the same or lower than the registered number. These changes in measurement of capacity have no impact on the Group's financial performance.

At the year end the Group had increased capacity by 106 places, which comprises 32 additional beds in reconfigured services, 41 beds in supported living and an additional capacity of 33 within fostering. After a review of fostering and domiciliary care, a total of 123 places were redefined as unavailable. In residential services, 14 places were withdrawn for reconfiguration into new care models and 19 places were removed in supported living.

As a result, the Group's net capacity at the year end was 2,116 places. Occupancy levels in the mature estate have been maintained at 92% and the blended occupancy remains approximately 84%.

The Group maintained its focus throughout the year on achieving the highest standards of care and on developing new services to meet current and anticipated market demand.

Net debt at the period end was £168.6m (30 September 2012: £131.2m and 31 March 2013: £133.2m). The increase in net debt reflects the earnings enhancing acquisition of the freehold property portfolios in August 2013. The cash generative nature of the acquisition enhances all debt service metrics, assisting the Group to repay debt at the same time as allowing the Group to enhance fee rates by reconfiguring properties. The Board believes the willingness of the syndicate of Banks to provide the additional debt further underlines the Group's strong asset backing and attractiveness to lenders.

CareTech will announce its preliminary results in early December 2013.

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