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 pre-close trading update ahead of its results for the year ended 30 September 2014.

The Board is pleased to confirm that trading for the year will be in line with expectations. This performance has been underpinned by the strategic initiatives undertaken over recent years which have delivered a stronger year on year performance on all of the key financial metrics.

CareTech's care pathways continue to be a key foundation to delivering positive outcomes for our service users. By helping our service users to live more independently we are working in partnership with local authorities by providing them with greater value for money.

During the course of the year, 63 additional beds in reconfigured services and new services have been brought into capacity. They have a higher contribution than the beds pre-configuration and are part of an ongoing strategy to enhance margins. The Group's net capacity at the year end was 2,074 places (2013: 2,116 places). The net decrease in capacity of 42 places comprises 12 places in services that have been withdrawn for reconfiguration into new care models and 30 places were removed in supported living. Once the services have been reconfigured, we expect them to contribute a higher profit margin than previously. The removal of 30 places from supported living is consistent with our care pathway model where individual circumstances meant that they can now live more independently. During the same period, there was a reduction of 63 in capacity within fostering, reflecting changes in the numbers on our register who were able to foster children during the year.

Occupancy levels in the mature estate have been maintained at 92% and the blended occupancy remains approximately 86% which is an improvement on 84% in 2013.

The annual fee rate negotiations with local authorities have led to a slightly positive outcome being achieved. The key to improving fee rates is our work on reconfiguring the services that we own to reposition them for the needs of more complex service users in line with commissioner demand. The new service users coming into our services are doing so at better fee rates. It is this combination of growth in fee rates which helps to increase earnings and puts the Group in a strong position going forward.

In the first half of the financial year, CareTech acquired EQL Solutions ("EQL"), a national provider of employment and training services to young people and adults. The strategic rationale of the transaction was to develop the skills of the Group's staff and service users and to create apprenticeships for the care sector.

After several months of detailed development work the Group has now launched the new CareTech Aspire Programme, which will ensure all CareTech's support workers receive all mandatory and statutory training to the highest standard whilst also being offered the opportunity to complete a Level 2 or Level 3 apprenticeship which has been carefully tailored to suit individual roles.

Around 80 CareTech apprentices have already begun their training with up to a 1,000 due to join the programme over the next twelve months. From November 2014, all newly hired support workers will also be offered an apprenticeship as part of their induction to CareTech. The Aspire programme aims to empower every member of staff to deliver high quality, personalised care and ensure there is a development pathway available to all.

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. The Care Quality Commission in England (CQC) assesses the services and defines whether they are compliant or non-compliant against standards of quality and safety. For the 128 CareTech services regulated by the CQC, the Group achieved 89% service compliance against a national average of 85%.

Net debt at the period end was £166.1m (30 September 2013: £168.6m). In the year there was ongoing investment in the reconfigurations, IT infrastructure and fleet as the Group accelerated its programme to replace home vehicles, together with the ongoing investment in the EQL platform.

CareTech will announce its preliminary results in early December 2014.

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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