Investment in United Arab Emirates

For immediate release 23 December 2019

CareTech Holdings PLC

("CareTech" or the "Company")

Investment in United Arab Emirates

CareTech International Ltd, a wholly owned subsidiary of CareTech Holdings PLC (AIM: CTH), a pioneering provider of specialist social care and education services, is pleased to announce an investment into the largest provider of private outpatient mental health services in the United Arab Emirates ("UAE"). Under the terms of the agreement, CareTech will own a 51% interest in AS Investments Holding Ltd and AS1 Investments Holding Ltd (the "AS Group") which holds a majority equity interest in an out-patient facility in Abu Dhabi and a mental health outpatient group of clinics (the "Investment").

As previously stated, CareTech has been evaluating opportunities for international expansion, believing the Care Pathways strategy successfully delivered in the UK is equally applicable in other territories. The UAE is an attractive market because the need for improved capacity and expertise in specialist social care, special education needs and mental health services has been recognised and is expected to receive significant focus in the coming years.

Background on the Investment

The AS Group was established in 2015 by Shafqat Malik, co-founder and CEO, to introduce best in class mental healthcare services in the Middle East and North Africa region. The group has an agreement with a leading NHS Foundation Trust Hospital in the mental healthcare arena in the UK for the provision of services in the greater Middle Eastern area. The current operations comprise an out-patient facility in the emirate of Abu Dhabi offering the following services: child and adolescent mental healthcare services, adult psychiatry and psychology services, training, education, to professionals and bespoke services to schools.

In 2018, a subsidiary of the AS Group was awarded a management contract to manage the largest Psychiatric Hospital in the UAE.

In addition, the group owns a majority equity interest in a premier mental health outpatient group of clinics focussing on providing highest quality specialised medical care for neurological, psychiatric and psychological conditions. Key service offerings include psychiatry, psychology, occupational therapy and rehabilitation.

The AS Group is expected to have a combined revenue of AED 79 million (approximately £16.5 million) for 2019.

CareTech is looking forward to supporting the Investments to develop the current services and expand pathways into specialist social care and special education needs services. Shafqat Malik will continue to lead the AS Group.

Transaction terms

The initial consideration for the Investment is £7.2m1, to be satisfied by £3.6m in cash, the issue of 431,465 CareTech new ordinary shares ("Consideration Shares") and a payment of £1.8m into the Investment to drive growth (the "Initial Consideration"). In addition to the Initial Consideration, there is also a performance driven earn-out mechanism of up to £1.6m1 to be paid out in 2021. The Consideration Shares will be subject to certain lock in arrangements for a period of 24 months. Once completed the Investment will be immediately earnings enhancing for CareTech. The cash consideration will be funded from the Company's existing cash resources and debt facilities. Application will made for admission of the Consideration Shares to trading on the AIM Market of the London Stock Exchange, which is expected to take place mid January ("Admission").

Completion of the Investment, including issue of the Consideration Shares, is conditional on certain conditions precedent ("Completion"). The Consideration Shares will, when issued, be credited as fully paid and rank equally in all respects with the existing Ordinary Shares, including the right to receive any dividend or other distribution declared, made or paid after Admission.

Total Voting Rights

For the purposes of the Financial Conduct Authority's Disclosure and Transparency Rules ("DTRs"), the issued ordinary share capital of the Company following Admission will consist of 112,124,305 Ordinary Shares of nil ordinary value with voting rights attached (one vote per Ordinary Share). There are no Ordinary Shares held in treasury. This total voting rights figure may be used by shareholders as the denominator for the calculations by which they will determine whether they are required to notify their interests in, or a change to their interest in, the Company under the DTRs.

[1] Based on an exchange of rate of GBP1: AED 4.7735

Farouq Sheikh, Executive Chairman of CareTech, commented:

"We have been interested for some time in the Gulf region as we believe CareTech can support the local transformation of services through our expertise and experience and expand pathways into specialist social care and special education needs services. The AS Group is well established and this partnership will lead to a number of exciting opportunities for CareTech in the UAE. I look forward to working with Shafqat Malik to expand market share and increase overall growth through the provision of social care and special education needs services in the region. I would like to thank the CareTech team and our advisors for their hard work and effort in getting this partnership off the ground."

Shafqat Malik, CEO of AS Group, commented:

"Our journey started in 2015 when we partnered with a leading mental healthcare NHS Trust to introduce best in class child and adult mental health services to the UAE; having established a successful clinical practice, we now plan to expand our offering in the social care and special educational needs domain. CareTech's expertise across the social care continuum will enable us to broaden our service offering and augurs well for introducing the best practices in our part of the world. I am very excited about this partnership and look forward to working with Farouq Sheikh and other members of the leadership team at CareTech to serve the growing market needs."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

For further information, please contact:

CareTech Holdings PLC 01707 601800

Farouq Sheikh, Executive Chairman PLC

Christopher Dickinson, Group Finance Director Designate

Buchanan (PR Adviser) 020 7466 5000

Mark Court

Tilly Abraham

Panmure Gordon (Nomad and Joint Broker) 020 7886 2500

Emma Earl

Freddy Crossley

Charles Leigh-Pemberton

WH Ireland (Joint Broker) 020 7220 1666

Adrian Hadden

Jessica Cave

Matthew Chan

Fortune MCS (AS Group's Advisors) +971 4 3995558

Abid Awan

Mufadhal Faiyaz

CareTech was advised by Freshfields Bruckhaus Deringer and PwC. AS Group was advised by Fortune MCS and Hogan Lovells (Middle East) LLP.

About CareTech

CareTech Holdings plc is a leading provider of specialist social care and education services, supporting around 4,500 adults and children with a wide range of complex needs in more than 550 residential facilities and specialist schools around the UK and employing approximately 10,000 staff.

Committed to the highest standards of care and care governance, CareTech provides its innovative care pathways covering; Adult learning disabilities and specialist services; Children's residential and education services; and foster care.

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.

For further information please visit: www.caretech-uk.com