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 2014.

The Board is pleased to report a strong performance for the half year, with trading in line with Directors' expectations. This performance reflects the strength of the Group's underlying business and the success of its innovative new services developed in partnership with care commissioners, positioning the Group for continued growth.

CareTech's focus on care pathways, and the reconfiguration of services to provide higher acuity care and higher margin services, continued in the half year.

The Group increased capacity by 20 additional beds in supported living services and 10 service users in domiciliary care. Net capacity remained unchanged within fostering. A total of 16 beds in services were closed for reconfiguration, and are expected to return to operational use within 12 months. A further 14 beds were closed in supported living and, as a result, total capacity at 31 March 2014 is unchanged from 30 September 2013 at 2,116 (31 March 2013: 2,198).

Occupancy levels within our mature services continue to be maintained at approximately 92%, and 84% when taking into account our services under development.

Further growth of the Group 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 2013 reconfigured services will soon open and are experiencing strong levels of demand from local authorities for referrals, validating our strategy of reconfiguration focusing upon greater acuity service provision.

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

As a result of the continued focus on organic growth, the net debt reduced to £165.7m at 31 March 2014 from £168.5m as at 30 September 2013, the Board expects net debt to continue to reduce across the remainder of the year.

In November 2013 CareTech acquired EQL Solutions ("EQL"), a national provider specialising in employment and training services to young people and adults. Initial integration with CareTech's core business has gone as planned. Good progress has been made in identifying the potential for EQL to support CareTech's recruitment of staff, helping new employees gain the skills and qualifications to grow a successful career in care. A range of bespoke development programmes is already being prepared to support new entrants and existing staff.

As well as supporting the workforce, EQL is also developing programmes for service users by enhancing the pathways to independent living and employment. Young adults leaving care, for example, are often unaware of where to find the right job opportunities or given the opportunity to access employer-focussed training. We can now bridge that gap by supporting young people as they make the transition to adult life. We are also exploring how best to help individuals return to employment after mental illness and to give people with learning disabilities the skills and confidence to gain employment so that they are able to live more independently.

Farouq Sheikh, Executive Chairman, commented:

"I am pleased to report another solid performance in the six months ended 31 March 2014, highlighting the growth trajectory that our strategy is delivering. By anticipating and responding to increasingly sophisticated demand-side trends and by being increasingly outcome based, CareTech has delivered increased revenue, underlying EBITDA and PBT on the comparable period in 2013, in line with the Board's expectations."

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