Half Year Trading Update

CareTech Holdings PLC

("CareTech" or "the Group")

Half 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 half year ended 31 March 2015.

The Board confirms that trading for the half year is 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.

On 27 February 2015, CareTech announced a conditional placing of 10,000,000 shares at a price of 210 pence per share, raising gross funds of £21.0m. Following approval at the Company's AGM, the new shares were listed on AIM on 10 March 2015. The Group's plan had been to raise £15m (gross), though the size of the fundraising was increased due to strong institutional demand. The management team invested a total of £1.153m, demonstrating its ongoing strong commitment. The Board was pleased that existing shareholders were extremely supportive and also welcomes a number of new shareholders to the Group, which subscribed to the placing. A number of organic growth projects and potential bolt-on acquisitions have been identified and the intention is that the placing proceeds be deployed within approximately twelve months of the issue. We continue to make good progress with a number of these opportunities.

During the course of the half year, 25 additional beds in reconfigured services and new services have been brought into capacity. They have a higher contribution than the beds in pre-configuration and are part of an ongoing strategy to enhance margins. The Group's net capacity at the half year was 2,052 places (2014: 2,074 places). The net decrease in capacity of 22 places comprises 20 places in services that have been withdrawn for reconfiguration into new care models and 2 places that were removed in supported living. Once the services have been reconfigured, we expect them to contribute a higher profit margin than previously. During the period, there was a net reduction of 18 in capacity within fostering, reflecting changes in the numbers on our register who were unable to foster children currently.

Occupancy levels in the mature estate have improved to 93% from 92% and the blended occupancy is at approximately 87%, which is an improvement on 86% at 30 September 2014.

Further growth will continue to be achieved by reconfiguring services and extending facilities in partnership with local authorities. Care commissioners continue to demand flexible high quality care solutions and favour operators able to deliver across the care pathway. Pleasingly, some of the 2014 reconfigured services will soon open and are already experiencing strong levels of demand from the local authorities for referrals, validating our strategy of reconfiguration focusing upon greater acuity service provision.

Annual fee rate negotiations with local authorities remain at an early stage but the Board anticipates that a slightly positive outcome will again be achieved.

Net debt reduced to £147.2m at 31 March 2015 from £166.1m at 30 September 2014 as a result of the receipt of the gross placing proceeds of £21m, less costs, plus favourable trading cash flow, offset by an increase in leasing on new fleet vehicles.

After several months of development work the Group launched the new CareTech Aspire Programme early in this half year; it will ensure that all of CareTech's care staff 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.

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. From November 2014, all newly hired support workers will also be offered an apprenticeship as part of their induction to CareTech. Up to 1,000 support workers are due to join the programme over the first twelve months and, to date, over 390 CareTech apprentices have begun their training.

As a foundation for growth the Board is pleased that the Senior Executive Team at CareTech has been strengthened with the appointment of John Ivers as Chief Operating Officer on 14 April 2015. He brings considerable experience from across the care sector as former COO of HC One and former Chief Executive of Saga Healthcare.

Farouq Sheikh, Executive Chairman, commented:

"I am pleased to report another solid performance in the six months ended 31 March 2015, highlighting the growth trajectory that our strategy is delivering. We are delighted by the support we have received in the oversubscribed fundraising from both new and existing investors. We would like to take this opportunity to welcome new investors and to thank our existing investors for their continued support. The additional funds will allow us to accelerate our growth strategy through organic initiatives and bolt-on acquisitions.

"I would also like to welcome John Ivers to CareTech and I am pleased that he has joined the team at this important time for the Group as we give further focus on growth."

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About CareTech

CareTech 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 164 properties.