RECOMMENDED OFFER FOR CAMBIAN GROUP PLC

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION

THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND CAMBIAN SHAREHOLDERS SHOULD NOT MAKE ANY INVESTMENT DECISION IN RELATION TO THE NEW CARETECH SHARES EXCEPT ON THE BASIS OF THE INFORMATION IN THE SCHEME DOCUMENT AND THE CARETECH PROSPECTUS WHICH ARE PROPOSED TO BE PUBLISHED IN DUE COURSE

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

16 August 2018

RECOMMENDED OFFER FOR CAMBIAN GROUP PLC BY CARETECH HOLDINGS PLC

TO BE EFFECTED BY WAY OF A SCHEME OF ARRANGEMENT UNDER PART 26 OF THE COMPANIES ACT 2006

1. Summary

The Boards of CareTech Holdings PLC ("CareTech") and Cambian Group plc ("Cambian") announce that they have reached agreement on the terms of a recommended acquisition of Cambian by CareTech, which is intended to be implemented by way of a scheme of arrangement of Cambian under Part 26 of the Companies Act, pursuant to which CareTech will acquire, at Completion, the entire issued and to be issued ordinary share capital of Cambian.

Under the terms of the Transaction, Cambian Shareholders will be entitled to receive the consideration pursuant to the Headline Offer or elect to receive the Full Cash Alternative in respect of any or all of their Cambian Shares.

Under the terms of the Headline Offer, for each Cambian Share held at the Scheme Record Time, Cambian Shareholders will be entitled to receive:

(a) 0.267 New CareTech Shares; and

(b) 100 pence in cash.

Under the terms of the Full Cash Alternative, for each Cambian Share held at the Scheme Record Time, Cambian Shareholders will be entitled to receive:

190 pence in cash.

2. Highlights

The Headline Offer, based on the Closing Price per CareTech Share on the Last Practicable Date of 374.5 pence, values the entire issued and to be issued ordinary share capital of Cambian on a fully diluted basis at approximately £372 million and approximately £289 million on an enterprise value basis.

The Headline Offer represents a value of 200.0 pence per Cambian Share at a premium of approximately:

(a) 35 per cent. to the Closing Price per Cambian Share of 148.2 pence on 9 July 2018 (being the last Business Day prior to the commencement of the Offer Period); and

(b) 17 per cent. to the 90 trading day Volume Weighted Average Price per Cambian Share of 171.4 pence on 9 July 2018.

Based on the Closing Price per CareTech Share on the Last Practicable Date, the value of the Headline Offer consists of, approximately 50 per cent. in cash and, approximately 50 per cent. in New CareTech Shares.

The Transaction will include the Full Cash Alternative pursuant to which Cambian Shareholders can elect to receive 190 pence in cash for each Cambian Share held at the Scheme Record Time instead of the cash and the New CareTech Shares to which they would otherwise be entitled under the terms of the Headline Offer.

Cambian Shareholders may elect to receive the Full Cash Alternative in respect of any or all of their Cambian Shares.

The Full Cash Alternative values the entire issued and to be issued ordinary share capital of Cambian on a fully diluted basis at approximately £354 million and approximately £271 million on an enterprise value basis.

The Full Cash Alternative represents a premium of approximately:

(a) 28 per cent. to the Closing Price per Cambian Share of 148.2 pence on 9 July 2018 (being the last Business Day prior to the commencement of the Offer Period); and

(b) 11 per cent. to the 90 trading day Volume Weighted Average Price per Cambian Share of 171.4 pence on 9 July 2018.

The Transaction (on the basis that only the GI Shareholders elect for the Full Cash Alternative in respect of all of their Cambian Shares and no other Cambian Shareholder makes any election for the Full Cash Alternative in respect of any of their Cambian Shares) will result in Cambian Shareholders owning approximately 34 per cent. and CareTech Shareholders owning approximately 66 per cent. of the issued share capital of the Enlarged Group at Completion.

The Enlarged Group will retain the CareTech Holdings PLC name, however, it is intended that the Cambian brand will be retained.

The existing executive directors of CareTech will remain as executive directors of the Enlarged Group. Accordingly, the executive directors of the Enlarged Group will comprise Farouq Sheikh (as Executive Chairman of the Enlarged Group), Haroon Sheikh (as CEO of the Enlarged Group) and Michael Hill (as CFO of the Enlarged Group).

John Ivers will be the COO of the CareTech operations within the Enlarged Group. Joining the senior management team of the Enlarged Group from Cambian will be Anne Marie Carrie (as COO of the Cambian operations within the Enlarged Group), who will report to Haroon Sheikh.

Karl Monaghan, James Cumming and Michael Adams will remain as non-executive directors on the Board of CareTech. It is CareTech's intention to add two additional non-executive directors to its Board within three months of Completion. Alongside these additional non-executive appointments, it is expected that Michael Adams will become an executive director of the Enlarged Group.

Each of the non-executive directors of Cambian has confirmed that he intends to resign from the Cambian Board conditional upon, and with effect from, Completion.

The Board of CareTech is confident that the integration of the two businesses can be achieved without undue disruption to the underlying operations of each business and it is not intended for there to be any material change to CareTech's or Cambian's current operational sites as a result of the Transaction. The Board of CareTech attaches great importance to the skills and experience of the existing management and employees of CareTech and Cambian and believes that the Enlarged Group would offer employees greater opportunities than would be available if the Transaction did not proceed.

The Board of CareTech believes that the Transaction has a compelling strategic and financial rationale for Cambian Shareholders and CareTech Shareholders:

· unique opportunity for investors to enhance exposure to the growing UK market for social care services for children and adults;

· highly complementary service offering and geographical coverage providing a nationwide integrated care pathway focused on higher acuity social care;

· combined operational expertise to better service local authority partners, deliver strong user outcomes, implement positive staff engagement and improve care quality; and

· opportunity to unlock significant value through a compelling strategic fit, tangible near-term synergies and enhanced trading liquidity.

In connection with the financing of the cash consideration payable under the terms of the Transaction (including the cash consideration payable in respect of the Full Cash Alternative) and the refinancing of its existing banking facilities, CareTech has entered into new banking facilities with Lloyds Bank plc and National Westminster Bank Plc as mandated lead arrangers and with Lloyds Bank plc and NatWest Markets plc as bookrunners and underwriters. The facilities provide committed financing by way of term loans of between 3.5 to 5 years of approximately £334 million and, in addition, a short term bridge loan of approximately £80 million to facilitate cash confirmation ahead of utilising Cambian's significant net cash position, which will be repayable shortly following Completion. A £25 million revolving credit facility will also be available. In the medium term, CareTech remains committed to maintaining leverage at between approximately 3-4x net debt to EBITDA.

The CareTech Directors believe the Transaction will allow Cambian Shareholders and CareTech Shareholders to share in substantial synergy benefits. Pursuant to this, the CareTech Directors have identified recurring pre-tax cost synergies of approximately £6 million per annum, with approximately £3 million expected to be realised in the financial year ending 30 September 2019, £5 million in the financial year ending 30 September 2020 and the full £6 million in the financial year ending 30 September 2021. As a result, the CareTech Directors believe the Transaction will be significantly accretive to CareTech's earnings in the first full financial year following Completion, with a return on invested capital above CareTech's cost of capital in the first full financial year following Completion.

Completion requires (amongst other things) publication of the CareTech Prospectus (an AIM admission document in respect of the Enlarged Group which will also comprise a prospectus). Cambian Shareholders and CareTech Shareholders are recommended to read the CareTech Prospectus in full when available. It is currently expected that the Transaction will be completed during Q4 2018. Further details of the Transaction will be set out in the Scheme Document, which will be published and sent to Cambian Shareholders as soon as possible, such publication currently expected to occur in September 2018. It is expected that the CareTech Prospectus, containing information about, amongst other things, the New CareTech Shares and the Enlarged Group and including notice of the CareTech General Meeting, will be published and posted to CareTech Shareholders and Cambian Shareholders at the same time as the Scheme Document. An expected timetable of principal events will be included in the Scheme Document and the CareTech Prospectus.

Commenting on today's announcement, Farouq Sheikh, Executive Chairman of CareTech, said:

"We are delighted to announce this recommended offer for Cambian. CareTech and Cambian are highly complementary and the combination of the two businesses will create the opportunity to improve outcomes for existing and future service users, to better serve care commissioners, to enhance opportunities for staff and to drive the focus on quality.

The financial rationale for the Transaction is compelling in its potential to generate value for both CareTech Shareholders and Cambian Shareholders. At the same time, the larger size of the Enlarged Group means that more funds will be made available to the CareTech Charitable Foundation to accelerate its important work in giving back to the most disadvantaged communities."

Commenting on today's announcement, Christopher Kemball, Chairman of Cambian, said:

"While the Cambian Board feels that the business already had a promising future as the largest independent provider of childcare, this Transaction represents an attractive proposition for Cambian Shareholders and broader stakeholders. Like Cambian, CareTech has an excellent reputation for the quality of its specialist education and behavioural health services as evidenced by CQC and Ofsted ratings ahead of sector averages. This should ensure that the children currently in Cambian's care will be well cared for. Furthermore, like Cambian, CareTech promotes employee development and will continue promoting staff continuity in the Enlarged Group."

The Cambian Directors, who have been so advised by Rothschild, Investec and J.P. Morgan Cazenove as to the financial terms of the Transaction, consider the terms of the Transaction (comprising the Headline Offer with the option of electing for the Full Cash Alternative) to be fair and reasonable. In providing their advice to the Cambian Directors, Rothschild, Investec and J.P. Morgan Cazenove have taken into account the commercial assessments of the Cambian Directors. Rothschild and Investec are providing independent financial advice to the Cambian Directors for the purpose of Rule 3.1 of the Takeover Code.

Accordingly, the Cambian Directors intend to recommend unanimously that Cambian Shareholders vote in favour of the Scheme at the Court Meeting and the Cambian Resolutions at the Cambian General Meeting (or in the event that the Transaction is implemented by way of a Takeover Offer, to accept or procure acceptance of such Takeover Offer) as the Cambian Directors who hold, or are otherwise beneficially interested in, Cambian Shares have irrevocably undertaken to do in respect of the beneficial holdings which are under their control of, in aggregate, 2,226,878 Cambian Shares (representing, in aggregate, approximately 1.2 per cent. of the Cambian Shares in issue on the Last Practicable Date).

Further details of these irrevocable undertakings are set out at Appendix 3 to this Announcement.

In reaching its conclusion, the Board of Cambian took the following key factors into account:

· certain Cambian Shareholders, Richard Griffiths and controlled undertakings, LOAME and Teleios Capital Partners LLC have expressed a strong desire for the Transaction to proceed and have irrevocably undertaken: (a) to vote in favour of the Transaction and (b) not to elect (or to instruct or procure that there be an election) for the Full Cash Alternative in respect of 95,635,744 Cambian Shares, representing, in aggregate, approximately 51.9 per cent. of the Cambian Shares in issue on the Last Practicable Date;

· the GI Shareholders, representing, in aggregate, approximately 22.2 per cent. of the Cambian Shares as at the Last Practicable Date, do not wish to continue their shareholding in the Enlarged Group and have irrevocably undertaken to vote in favour of the Transaction and elect for the Full Cash Alternative in respect of all of their Cambian Shares; and

· Cambian Shareholders who have not entered into irrevocable undertakings, representing, in aggregate, approximately 16.1 per cent. of the Cambian Shares in issue on the Last Practicable Date, will have the choice to elect for the Full Cash Alternative in respect of any or all of their Cambian Shares or accept cash and shares in the Enlarged Group through the Headline Offer.

In addition to the irrevocable undertakings from the Cambian Directors, CareTech has received irrevocable undertakings from certain other Cambian Shareholders to vote in favour of the Scheme at the Court Meeting and to vote in favour of the Cambian Resolutions in respect of an aggregate of 145,367,063 Cambian Shares representing, in aggregate, approximately 78.9 per cent. of the Cambian Shares in issue on the Last Practicable Date.

Due to the size of the Transaction, it constitutes a "reverse takeover" (as defined in the AIM Rules) for CareTech. Accordingly, CareTech will be required to publish the CareTech Prospectus, seek the approval of CareTech Shareholders at the CareTech General Meeting for the Transaction and apply for admission of the Enlarged Share Capital to trading on AIM. Subject to the Transaction becoming Effective, Cambian's admission to the premium listing segment of the Official List and to trading on the Main Market will be cancelled.

Within the medium term following Completion, it is CareTech's ambition to apply for admission to the premium listing segment of the Official List and to trading on the Main Market.

The CareTech Directors have received financial advice from Jefferies in relation to the Transaction. In providing its advice, Jefferies has relied upon the commercial assessments of the CareTech Directors.

The CareTech Directors consider the terms of the Transaction to be in the best interests of CareTech and the CareTech Shareholders taken as a whole and accordingly intend to recommend unanimously that CareTech Shareholders vote in favour of the CareTech Resolutions at the CareTech General Meeting as the CareTech Directors who hold, or are otherwise beneficially interested in, CareTech Shares have irrevocably undertaken to do in respect of the beneficial holdings which are under their control of, in aggregate, 11,266,619 CareTech Shares (representing, in aggregate, approximately 14.9 per cent. of the CareTech Shares in issue on the Last Practicable Date).

In addition to the irrevocable undertakings from the CareTech Directors:

· CareTech and Cambian have received an irrevocable undertaking from Stichting Value Partners Family Office; and

· CareTech has received an irrevocable undertaking from Liontrust,

to vote in favour of the CareTech Resolutions at the CareTech General Meeting in respect of 20,731,157 CareTech Shares representing, in aggregate, approximately 27.4 per cent. of the CareTech Shares in issue on the Last Practicable Date. 

Further details of these irrevocable undertakings are set out in Appendix 3 to this Announcement.

This summary should be read in conjunction with, and is subject to, the full text of this Announcement (including its Appendices).

The Transaction will be subject to the Conditions and certain further terms set out in Appendix 1 and to the full terms and conditions to be set out in the Scheme Document, Forms of Proxy and Form of Election.

Appendix 2 contains the sources and bases of certain information contained in this Announcement. 

Appendix 3 contains details of the irrevocable undertakings received by CareTech and Cambian (as applicable).

Appendix 4 Part A contains the statement made by the CareTech Directors on the anticipated quantified financial benefits of the Transaction together with the relevant bases of belief (including sources of information and principal assumptions) supporting the statement and their analysis and explanation of the underlying constituent elements. Parts B and C respectively contain the related reports from CareTech's reporting accountants, Grant Thornton, and financial adviser, Jefferies.

For the purpose of Rule 28 of the Takeover Code, the Quantified Financial Benefits Statement contained in this Announcement is the responsibility of CareTech and the CareTech Directors. Each of Grant Thornton and Jefferies has given and not withdrawn its consent to the publication of its reports in this Announcement in the form and context in which they are included.

Appendix 5 contains the definitions of certain terms used in this Announcement.

There will be a presentation for research analysts and investors at 9.30 a.m. (BST) today, to be held at the offices of Buchanan, 107 Cheapside, London EC2V 6DN.

If you would like to attend the briefing, please register in advance via [email protected] or on 0207 466 5000.

The presentation will also be accessible via a live conference call facility:

UK Toll Free: 0808 237 0040

Participant PIN code: 76306787#

International dial in numbers:

http://events.arkadin.com/ev/docs/FEL_Events_International_Access_List.pdf

There will be a replay available for one month following the presentation:

UK Toll-Free Number: 0808 237 0026

Conference Number: 698610#

A copy of the presentation will be available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, at www.CareTech-uk.com in due course. The content of the website referred to in this Announcement is not incorporated into and does not form part of this Announcement.

Enquiries:

Ashurst LLP and Charles Russell Speechlys LLP are retained as legal advisers to CareTech.

Clifford Chance LLP and Trowers & Hamlins LLP are retained as legal advisers to Cambian.

Further information

This Announcement is for information purposes only and is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the Transaction or otherwise, nor shall there be any sale, issuance or transfer of securities of Cambian or CareTech in any jurisdiction pursuant to the Transaction in contravention of applicable law.

The Transaction will be implemented solely pursuant to the Scheme Document to be distributed to Cambian Shareholders, which, together with the Forms of Proxy and the Form of Election will contain the full terms and conditions of the Transaction including details of how to vote in respect of the Transaction and how to make an election under the Full Cash Alternative. Any vote in respect of the Scheme or other response in relation to the Transaction should be made only on the basis of the information contained in the Scheme Document and the CareTech Prospectus.

Cambian will prepare the Scheme Document to be distributed to Cambian Shareholders and CareTech will prepare the CareTech Prospectus to be distributed to CareTech Shareholders and Cambian Shareholders. Cambian urges Cambian Shareholders to read the Scheme Document and the CareTech Prospectus when they become available because they will contain important information in relation to the Transaction, the New CareTech Shares, Admission and the Enlarged Group. CareTech urges CareTech Shareholders to read the CareTech Prospectus when it becomes available because it will contain important information in relation to the Transaction, the New CareTech Shares, Admission and the Enlarged Group. Any vote in respect of the Scheme or other response in relation to the Transaction should be made only on the basis of the information contained in the Scheme Document, or the CareTech Prospectus, as appropriate.

This Announcement does not constitute a prospectus or prospectus equivalent document.

Important notices

Jefferies International Limited, which is regulated in the United Kingdom by the Financial Conduct Authority, is acting as financial adviser exclusively for CareTech and no one else in connection with the matters set out in this Announcement. In connection with such matters, Jefferies will not regard any other person as its client and will not be responsible to anyone other than CareTech for providing the protections afforded to clients of Jefferies or for providing advice in relation to the contents of this Announcement or any other matter referred to herein. Neither Jefferies nor any of its subsidiaries, affiliates or branches owes or accepts any duty, liability or responsibility whatsoever (whether direct, indirect, consequential, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Jefferies in connection with this Announcement, any statement contained herein or otherwise.

Panmure Gordon (UK) Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for CareTech and no one else in connection with the matters set out in this Announcement and will not be responsible to anyone other than CareTech for providing the protections afforded to clients of Panmure Gordon, nor for providing advice in relation to the matters set out in this Announcement or any matters referred to in this Announcement.

N.M. Rothschild & Sons Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Cambian and for no one else in connection with the subject matter of this Announcement and will not be responsible to anyone other than Cambian for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this Announcement.

Investec Bank plc, which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority, is acting exclusively for Cambian and no one else in connection with the subject matter of this Announcement and will not be responsible to anyone other than Cambian for providing the protections afforded to clients of Investec nor for giving advice in relation to the subject matter of this Announcement or any other matter or arrangement referred to in this Announcement.

J.P. Morgan Securities plc, which conducts its UK investment banking business as J.P. Morgan Cazenove, is authorised in the United Kingdom by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. J.P. Morgan Cazenove is acting as financial adviser exclusively for Cambian and no one else in connection with the Transaction and will not regard any other person as its client in relation to the Transaction and will not be responsible to anyone other than Cambian for providing the protections afforded to clients of J.P. Morgan Cazenove or its affiliates, nor for providing advice in connection with the Transaction or any other matter or arrangement referred to in this Announcement.

Forward-looking statements

This Announcement contains statements about the Wider CareTech Group, the Wider Cambian Group and the Enlarged Group that are or may be forward looking statements. All statements other than statements of historical facts included in this Announcement may be forward looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "should", "continue", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects", "ambition" or words or terms of similar substance or the negative thereof, are forward looking statements. Forward looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of the Wider Cambian Group's, the Wider CareTech Group's or the Enlarged Group's operations and potential synergies resulting from the Transaction; and (iii) the effects of government regulation on the Wider Cambian Group's, the Wider CareTech Group's or the Enlarged Group's business.

Such forward looking statements involve risks and uncertainties that could significantly affect expected results and are based on assumptions and assessments made by CareTech and/or Cambian in light of their experience and their perception of historical trends, current conditions, future developments and other factors they believe appropriate. Many factors could cause actual results to differ materially from those projected or implied in any forward looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements, which speak only as of the date hereof. Neither the Wider Cambian Group nor the Wider CareTech Group assume any obligation to update any forward looking or other statements contained herein, except as required by applicable law or regulation.

Quantified Financial Benefits Statement

Statements of estimated cost savings and synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, the cost savings and synergies referred to may not be achieved, may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. No statement in the Quantified Financial Benefits Statement, or this Announcement generally, should be construed as a profit forecast, or interpreted to mean that the Enlarged Group's earnings or earnings per share in the first full year following Completion, or in any subsequent period, would necessarily match or be greater than or be less than those of CareTech and/or Cambian for the relevant preceding financial period or any other period. For the purpose of Rule 28 of the Takeover Code, the Quantified Financial Benefits Statement contained in this Announcement is the responsibility of CareTech and the CareTech Directors.

Disclosure requirements of the Takeover Code

Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following this Announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following this Announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0) 20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Rule 2.9 information

In accordance with Rule 2.9 of the Takeover Code, CareTech confirms that, as at the date of this Announcement, it has in issue 75,691,423 ordinary shares of 0.5 pence each. A concert party of CareTech holds 1,439,495 shares of 1 pence each in Cambian. CareTech does not hold any ordinary shares in treasury. The International Securities Identification Number (ISIN) for CareTech's ordinary shares is GB00B0KWHQ09.

In accordance with Rule 2.9 of the Takeover Code, Cambian confirms that, as at the date of this Announcement, it has in issue 184,198,746 ordinary shares of 1 pence each. Cambian does not hold any ordinary shares in treasury. The International Securities Identification Number (ISIN) for Cambian's ordinary shares is GB00BKXNB024.

Overseas Jurisdictions

The release, publication or distribution of this Announcement in or into certain jurisdictions may be restricted by the laws of those jurisdictions. Accordingly, copies of this Announcement and all other announcements and documentation relating to the Transaction are not being, and must not be, released, published, mailed or otherwise forwarded, distributed or sent in, into or from any jurisdiction where to do so would violate the laws of that jurisdiction or any Restricted Jurisdiction. Persons receiving such announcements or documentation (including, without limitation, nominees, trustees and custodians) should inform themselves of, and observe, these restrictions. Failure to do so may constitute a violation of the securities laws of any such jurisdiction. In particular, the ability of persons who are not resident in the United Kingdom or who are subject to the laws of another jurisdiction to vote their Cambian Shares in respect of the Scheme at the Court Meeting, to elect for the Full Cash Alternative, or to execute and deliver Forms of Proxy appointing another to vote at the Court Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located or to which they are subject. To the fullest extent permitted by applicable law, the companies involved in the Transaction disclaim any responsibility or liability for the violations of any such restrictions by any person.

This Announcement has been prepared for the purposes of complying with English law, the rules of the London Stock Exchange and the Takeover Code and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws and regulations of any jurisdictions outside England and Wales.

The New CareTech Shares have not been and will not be registered under the US Securities Act or under the securities laws of any state or other jurisdiction of the United States and may not be offered or sold in the United States absent registration or an exemption from registration under the US Securities Act.

Unless otherwise determined by CareTech or required by the Takeover Code, and permitted by applicable law and regulation, the Transaction will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Transaction by any such use, means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction.

The availability of the Transaction and the New CareTech Shares under the Transaction to Cambian Shareholders who are not resident in the United Kingdom, and the availability of the Full Cash Alternative to such shareholders, may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable legal or regulatory requirements.

Further details in relation to the treatment of Overseas Shareholders for the purpose of the Transaction will be contained in the Scheme Document.

Information relating to Cambian Shareholders

Please be aware that addresses, electronic addresses and certain other information provided by Cambian Shareholders, persons with information rights and other relevant persons for the receipt of communications from Cambian may be provided to CareTech during the Offer Period as required under Section 4 of Appendix 4 of the Takeover Code.

Publication on website and hard copies

A copy of this Announcement and the documents required to be published by Rule 26 of the Takeover Code will be available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on CareTech's website at www.caretech-uk.com and Cambian's website at www.cambiangroup.com by no later than 12 noon on 17 August 2018. For the avoidance of doubt, the content of those websites is not incorporated into and do not form part of this Announcement.

Cambian Shareholders and CareTech Shareholders may request a hard copy of this Announcement by contacting +44 (0) 371 384 2030 (non-UK callers +44 (0) 121 415 7047) (for Cambian Shareholders) or +44 (0) 871 664 0300 (non-UK callers +44 (0) 371 664 0300) (for CareTech Shareholders) during business hours or by submitting a request in writing to Equiniti at Cambian Group plc Registrar, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA (for Cambian Shareholders) or Link at Link Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU (for CareTech Shareholders). If you have received this Announcement in electronic form, copies of this Announcement will not be provided unless such a request is made.

If you are in any doubt about the contents of this Announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or independent financial adviser, duly authorised under FSMA if you are resident in the United Kingdom, or from another appropriately authorised independent financial adviser.

Rounding

Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION

THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND CAMBIAN SHAREHOLDERS SHOULD NOT MAKE ANY INVESTMENT DECISION IN RELATION TO THE NEW CARETECH SHARES EXCEPT ON THE BASIS OF THE INFORMATION IN THE SCHEME DOCUMENT AND THE CARETECH PROSPECTUS WHICH ARE PROPOSED TO BE PUBLISHED IN DUE COURSE

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

16 August 2018

RECOMMENDED OFFER FOR CAMBIAN GROUP PLC BY CARETECH HOLDINGS PLC

TO BE EFFECTED BY WAY OF A SCHEME OF ARRANGEMENT UNDER PART 26 OF THE COMPANIES ACT 2006

1. Introduction

The Boards of CareTech Holdings PLC ("CareTech") and Cambian Group plc ("Cambian") announce that they have reached agreement on the terms of a recommended acquisition of Cambian by CareTech.

It is currently envisaged that the Transaction will be implemented by way of a court sanctioned scheme of arrangement of Cambian under Part 26 of the Companies Act, pursuant to which CareTech will acquire, at Completion, the entire issued and to be issued ordinary share capital of Cambian (although CareTech reserves the right to effect the Transaction by way of a Takeover Offer under certain circumstances described in this Announcement).

2. The Transaction

Under the terms of the Transaction, which will be on the terms and subject to the Conditions set out below and in Appendix 1 to this Announcement, and to be set out in the Scheme Document, Forms of Proxy and Form of Election, Cambian Shareholders will be entitled to receive the consideration pursuant to the Headline Offer or elect to receive the Full Cash Alternative in respect of any or all of their Cambian Shares.

Under the terms of the Headline Offer, Cambian Shareholders will be entitled to receive:

The Headline Offer, based on the Closing Price per CareTech Share on the Last Practicable Date of 374.5 pence, values the entire issued and to be issued ordinary share capital of Cambian on a fully diluted basis at approximately £372 million and approximately £289 million on an enterprise value basis.

The Headline Offer represents a value of 200.0 pence per Cambian Share at a premium of approximately:

(a) 35 per cent. to the Closing Price per Cambian Share of 148.2 pence on 9 July 2018 (being the last Business Day prior to the commencement of the Offer Period); and

(b) 17 per cent. to the 90 trading day Volume Weighted Average Price per Cambian Share of 171.4 pence on 9 July 2018

The Transaction will include the Full Cash Alternative pursuant to which Cambian Shareholders can elect to receive all cash consideration for each Cambian Share held at the Scheme Record Time instead of the cash and the New CareTech Shares to which they would otherwise be entitled under the terms of the Headline Offer.

Under the terms of the Full Cash Alternative, Cambian Shareholders will be entitled to receive:

Cambian Shareholders may elect to receive the Full Cash Alternative in respect of any or all of their Cambian Shares.

The Full Cash Alternative values the entire issued and to be issued ordinary share capital of Cambian on a fully diluted basis at approximately £354 million and approximately £271 million on an enterprise value basis. The Full Cash Alternative represents a premium of approximately:

(a) 28 per cent. to the Closing Price per Cambian Share of 148.2 pence on 9 July 2018 (being the last Business Day prior to the commencement of the Offer Period); and

(b) 11 per cent. to the 90 trading day Volume Weighted Average Price per Cambian Share of 171.4 pence on 9 July 2018.

The Transaction (on the basis that only the GI Shareholders elect for the Full Cash Alternative in respect of all of their Cambian Shares and no other Cambian Shareholder makes any election for the Full Cash Alternative in respect of any of their Cambian Shares) will result in the allotment and issue of approximately 38,282,249 New CareTech Shares to Cambian Shareholders, which will result in Cambian Shareholders owning approximately 34 per cent. and CareTech Shareholders owning approximately 66 per cent. of the issued share capital of the Enlarged Group at Completion.

The Transaction is also subject to the Conditions and further terms set out in Appendix 1 to this Announcement including, amongst other things, the approval of the CareTech Resolutions by CareTech's Shareholders at the CareTech General Meeting, approval of the Scheme and of the Cambian Resolutions at the Cambian Meetings, Admission and the sanction of the Scheme by the Court. Upon the Scheme becoming Effective, it will be binding on all Scheme Shareholders, irrespective of whether or not they attended or voted at the Cambian Meetings and, if they attended and voted, whether or not they voted in favour.

Fractions of pence will not be paid to Scheme Shareholders and cash entitlements will be rounded down to the nearest penny. Fractions of New CareTech Shares will not be allotted or issued to Scheme Shareholders and entitlements will be rounded down to the nearest whole number of CareTech Shares and all fractions of New CareTech Shares will be aggregated and sold in the market as soon as practicable after the Effective Date. The net proceeds of such sale (after deduction of all expenses and commissions incurred in connection with the sale) will be distributed by CareTech in due proportions to Scheme Shareholders who would otherwise have been entitled to such fractions, save that individual entitlements to amounts of less than £5 will be retained for the benefit of the Enlarged Group.

CareTech Shares are currently admitted to trading on AIM. Application will be made to the London Stock Exchange for the Enlarged Share Capital to be issued pursuant to the Transaction, to be admitted to trading on AIM, as further detailed at paragraph 20 below.

Details of how Cambian Shareholders resident in the United Kingdom can hold, access and trade the New CareTech Shares will be set out in the Scheme Document. Cambian Shareholders resident in the United Kingdom will be able to hold their New CareTech Shares in any of the ways currently available to CareTech Shareholders, including through an intermediary of their own choice should they wish to do so.

The availability of the Transaction and the New CareTech Shares, to be issued and allotted under the Transaction, to persons who are not resident in, and the distribution of this Announcement to persons who are not resident in, the United Kingdom (including the ability to make valid elections in respect of the Transaction) may be affected by the laws of the relevant jurisdiction in which such persons are located. Such persons should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdiction. Cambian Shareholders who are in any doubt regarding such matters should consult an appropriate independent professional adviser in the relevant jurisdiction without delay. Further details relevant to Cambian Shareholders resident outside of the United Kingdom will be set out in the Scheme Document.

The Scheme Document, containing further information about the Transaction and notices convening the Court Meeting and the Cambian General Meeting, together with the relevant Forms of Proxy and a Form of Election, will be published and sent to Cambian Shareholders as soon as possible (such publication currently expected to occur in September 2018) and will be made available by CareTech on its website at http://www.caretech-uk.com and by Cambian on its website at https://www.cambiangroup.com.

It is expected that the CareTech Prospectus, containing information about, amongst other things, the CareTech Shares (including the New CareTech Shares), the Enlarged Group, the background to and reasons for the Transaction and a notice convening the CareTech General Meeting, will be sent to Cambian Shareholders and CareTech Shareholders and published at the same time as the Scheme Document is published and posted to Cambian Shareholders. Subject to the satisfaction or (where applicable) waiver of the Conditions and certain further terms set out in Appendix 1 to this Announcement and to be set out in the Scheme Document, it is expected that the Scheme will become Effective in Q4 2018.

3. Background to and reasons for the Transaction

The Board of CareTech believes that the Transaction has a compelling strategic and financial rationale for Cambian Shareholders and CareTech Shareholders:

· Unique opportunity for investors to enhance exposure to the growing UK market for social care services for children and adults:

Following Completion, the Enlarged Group will be the second largest UK social care operator by revenue and the only one with a UK listing.

The UK social care sector is one of the high growth segments of the UK healthcare services market, which is driven by increased public outsourcing, a growing demand for specialist services, a shortage of suitable supply and a requirement for improved outcomes. Furthermore, in June 2018, the UK government announced a planned real-terms annual spending rise for NHS England of 3.4 per cent. until 2023-24, generating an additional £20.5 billion a year by the end of the period. Part of this increased funding is expected to be directed at services provided by the Enlarged Group.

The increased scale of the Enlarged Group provides the opportunity to increase the provision of services, improve access to health commissioners and improve outcomes for service users.

· Highly complementary service offering and geographical coverage providing a nationwide integrated care pathway focused on higher acuity social care:

A combination of CareTech and Cambian would provide the opportunity to create a diversified operator in the higher acuity social care sector for adults and children in the United Kingdom.

CareTech's offerings in learning disabilities and specialist services for adults and residential services for young people is highly complementary to Cambian's positions in children's residential care, specialist education and therapeutic fostering. More specifically, combining CareTech's higher acuity residential and transitional care services with Cambian's specialist education and schools would provide a holistic wraparound children's service. The CareTech Directors believe that CareTech's fostering services across mainstream, specialist, and family assessments would reinforce the therapeutic services provided by Cambian. CareTech also has an apprenticeship offering through the Learning Division which places young people into meaningful employment.

The Transaction would also broaden the geographical reach of the network, providing a nationwide offering. CareTech would provide access to key areas in which Cambian does not currently operate at all, or in scale, including Scotland, Wales, and Greater London. Through this combination, the Enlarged Group would be ideally positioned to better serve local authority partners and communities with an integrated care offering, and importantly, enhance operating margins.

· Combined operational expertise to better service local authority partners, deliver strong user outcomes, implement positive staff engagement and improve care quality:

Shared best operational practices across the Enlarged Group would enable the creation of a robust and sustainable operating model to better serve partners and service users.

CareTech employs well-qualified and skilled professionals to enable it to consistently exceed the expectations of its service users, their families, social workers and commissioners.

The Enlarged Group would also provide a platform of development opportunities for employees, reinforcing a positive workplace culture and promoting staff continuity. Through the combination, Cambian would be able to leverage CareTech's highly developed recruitment and retention functions, which have contributed to CareTech achieving staff turnover rates of 21 per cent., which, the CareTech Directors believe, is substantially better than the sector average. This would assist the Enlarged Group in achieving strong quality ratings and help position it as a preferred partner for local authorities and health services commissioners.

CareTech's Learning Services division, which assists young people in obtaining employment opportunities and apprenticeships, would augment Cambian's services and care pathway.

· Opportunity to unlock significant value through a compelling strategic fit, tangible near-term synergies and enhanced trading liquidity:

CareTech has a long track record of successful acquisitions, having undertaken multiple transactions over the past decade, which have been successfully integrated and benefited from being part of an enlarged group. 

The CareTech Directors anticipate a combination of CareTech and Cambian will deliver significant synergies, allow continuation of aligned strategies and sharing of best practices and optimise investments in strategic initiatives. The share component of the Headline Offer provides Cambian shareholders with the opportunity to participate in a continuation of this successful track record of growth and value creation.

The CareTech Directors believe the Transaction will be significantly accretive to CareTech's earnings in the first full financial year following Completion, with a return on invested capital above CareTech's cost of capital in the first full financial year following Completion.

The CareTech Directors believe the Transaction will allow Cambian Shareholders and CareTech Shareholders to share substantial synergy benefits and have identified recurring pre-tax cost synergies of approximately £6 million per annum.

The synergies identified below reflect both beneficial elements and relevant costs that arise as a result of the Transaction and could not be achieved by the CareTech and Cambian businesses operating independently of each other. A central objective of the integration will, however, be the retention of the brands and capabilities of both CareTech and Cambian.

The Board of CareTech has identified the following potential recurring cost synergies:

· estimated £5.3 million reduction in combined central costs through rationalised head office, IT, board, management and other costs;

· estimated £0.4 million reduction in combined central costs through rationalised support function staff costs; and

· estimated procurement savings of £0.3 million from scale efficiencies.

The Board of CareTech expects to realise the synergies on a phased basis as follows:

· approximately £3 million of pre-tax cost synergies will be realised in the financial year ending 30 September 2019;

· approximately £5 million of pre-tax cost synergies will be realised in the financial year ending 30 September 2020; and

· approximately £6 million of pre-tax cost synergies will be realised in the financial year ending 30 September 2021.

The Board of CareTech expects that the integration process and the realisation of these synergies will result in one-off exceptional costs of approximately £7.6 million. The exceptional costs are expected to occur on a phased basis: approximately £3.0 million in the financial year ending 30 September 2019, approximately £3.1 million in the financial year ending 30 September 2020 and approximately £1.5 million in the financial year ending 30 September 2021. The CareTech Directors do not expect any material dis-synergies to arise in connection with the Transaction.

Cambian's depreciation charge following Completion is expected to be lower per annum as a result of the alignment of depreciation procedures between Cambian and CareTech.

Following Completion, the Cambian brand will be retained and it is not intended for there to be any material change to CareTech's or Cambian's current operational sites as a result of the Transaction. Therefore, the Board of CareTech is confident that the integration of the two businesses can be achieved without undue disruption to the underlying operations of each business.

It is expected that there will be a net reduction in the number of Enlarged Group full-time equivalent employees of less than 0.5 per cent. of the Enlarged Group's estimated employee base as at Completion, which will principally be as a result of the proposed head office rationalisation. The exact number of employees, specific operating functions and locations affected by the integration will depend on the finalisation of the integration planning and these changes are likely only to come into effect as synergies are realised.

As soon as practicable following the Effective Date, the Enlarged Group will aim to have fully validated the initial synergy assumptions, produced a more detailed integration plan and completed the principal elements of the restructuring of the Cambian business, which will include senior management appointments, reporting structures and operational and executive authority limits.

There are several material assumptions underlying the calculation of the above-mentioned synergy statements which, therefore, might be materially greater or less than those estimated. Please refer to Appendix 2 for further details of the underlying calculations and the material assumptions. Appendix 4 includes letters from Grant Thornton, as reporting accountants to CareTech, and Jefferies, as financial advisers to CareTech, for the purposes of the Takeover Code.

These statements of estimated cost synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, the cost synergies referred to may not be achieved, may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. For the purposes of Rule 28 of the Takeover Code, these statements of estimated cost synergies are the responsibility of CareTech and the CareTech Directors.

These statements are not intended as a profit forecast and should not be interpreted as such.

4. Financing of the Transaction

In connection with the financing of the cash consideration payable under the terms of the Transaction (including the cash consideration payable in respect of the Full Cash Alternative) and the refinancing of its existing banking facilities, CareTech has entered into new banking facilities with Lloyds Bank plc and National Westminster Bank Plc as mandated lead arrangers and with Lloyds Bank plc and NatWest Markets plc as bookrunners and underwriters.

The facilities provide committed financing by way of term loans of between 3.5 to 5 years of approximately £334 million and, in addition, a short term bridge loan of approximately £80 million to facilitate cash confirmation ahead of utilising Cambian's significant net cash position, which will be repayable shortly following Completion. A £25 million revolving credit facility will also be available.

In the medium term, CareTech remains committed to maintaining leverage at between approximately 3-4x net debt to EBITDA.

Jefferies, as financial adviser to CareTech, is satisfied that sufficient resources are available to CareTech to enable it to satisfy in full the cash consideration payable to Cambian Shareholders under the terms of the Transaction.

Further information on the financing of the Transaction will be set out in the Scheme Document.

5. Further terms of the Transaction

Any Cambian Shares issued on or before the Scheme Record Time will be subject to the terms of the Scheme. The Cambian Shares will be acquired by CareTech pursuant to the Transaction fully paid and free from all liens, charges, equitable interests, encumbrances, rights of pre-emption and any other third party rights of any nature whatsoever and together with all rights now or hereafter attaching thereto, including without limitation voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after the date of this Announcement.

In so far as any dividend or other distribution or return of value is authorised, declared, made, paid or payable by Cambian in respect of the Scheme Shares on or after the date of this Announcement, CareTech reserves the right to reduce the Offer Price in respect of the Scheme Shares by the aggregate amount of any such dividend, other distribution or return of value or of any such excess except where the Scheme Shares are or will be acquired on a basis which entitles CareTech to receive the dividend, other distribution or return of value and retain it. In the case of the Headline Offer, the cash element of the Offer Price will be reduced first.

The New CareTech Shares will be issued credited as fully paid and will rank pari passu in all respects with the Existing CareTech Shares, including the right to receive and retain in full all dividends and other distributions (if any) made, paid or declared by reference to a record date falling after the Effective Date (exclusive of the interim dividend of 3.50 pence (net) per share in respect of the year ending 30 September 2018 expected to be paid on 23 November 2018). The New CareTech Shares will be issued in registered form and will be capable of being held in both certificated and uncertificated form. The New CareTech Shares will trade under the same ISIN number as the Existing CareTech Shares.

6. Full Cash Alternative

There will be a Full Cash Alternative pursuant to which Cambian Shareholders can elect to receive all cash consideration for each Cambian Share held at the Scheme Record Time instead of the cash and the New CareTech Shares to which they would otherwise be entitled under the terms of the Headline Offer.

Any Cambian Shareholder electing for the Full Cash Alternative will receive 190 pence in cash for each Cambian Share held at the Scheme Record Time for which an election has been made and no New CareTech Shares in respect of such Cambian Share. If a Cambian Shareholder does not elect for the Full Cash Alternative in respect of any of their Cambian Shares, they will receive 0.267 New CareTech Shares and 100 pence in cash for each Cambian Share held at the Scheme Record Time in accordance with the Headline Offer.

Cambian Shareholders may elect to receive the Full Cash Alternative in respect of any or all of their Cambian Shares.

The Full Cash Alternative is conditional upon the Scheme becoming Effective.

Elections under the Full Cash Alternative will not affect the entitlements of those Cambian Shareholders who do not make such elections. All elections under the Full Cash Alternative will be satisfied in full.

Further details in relation to the Full Cash Alternative will be contained in the Scheme Document and the related Form of Election.

Certain Cambian Shareholders who, in aggregate, hold 111,470,489 Cambian Shares representing, in aggregate, approximately 60.5 per cent. of the Cambian Shares in issue on the Last Practicable Date have irrevocably undertaken to make no election (or to instruct or procure that no election is made) under the Full Cash Alternative in respect of any of their Cambian Shares and, accordingly, should the Scheme become Effective, will receive the New CareTech Shares and the cash consideration in accordance with the Headline Offer in respect of all of their Cambian Shares.

The GI Shareholders who, in aggregate, hold 40,819,536 Cambian Shares, representing, in aggregate, approximately 22.2 per cent. of the Cambian Shares in issue on the Last Practicable Date have irrevocably undertaken to elect for the Full Cash Alternative in respect of all of their Cambian Shares and, accordingly, should the Scheme become Effective, they will each receive all cash consideration instead of the cash and the New CareTech Shares to which they would have been entitled under the Headline Offer.

Further details of these irrevocable undertakings are set out at Appendix 3 to this Announcement.

7. Recommendation by the Cambian Directors

The Cambian Directors, who have been so advised by Rothschild, Investec and J.P. Morgan Cazenove as to the financial terms of the Transaction, consider the terms of the Transaction (comprising the Headline Offer with the option of electing for the Full Cash Alternative) to be fair and reasonable. In providing their advice to the Cambian Directors, Rothschild, Investec and J.P. Morgan Cazenove have taken into account the commercial assessments of the Cambian Directors. Rothschild and Investec are providing independent financial advice to the Cambian Directors for the purpose of Rule 3.1 of the Takeover Code.

Accordingly, the Cambian Directors intend to recommend unanimously that Cambian Shareholders vote in favour of the Scheme at the Court Meeting and the Cambian Resolutions at the Cambian General Meeting (or in the event that the Transaction is implemented by way of a Takeover Offer, to accept or procure acceptance of such Takeover Offer) as the Cambian Directors who hold, or are otherwise beneficially interested in, Cambian Shares have irrevocably undertaken to do in respect of the beneficial holdings which are under their control of, in aggregate, 2,226,878 Cambian Shares (representing, in aggregate, approximately 1.2 per cent. of the Cambian Shares in issue on the Last Practicable Date).

Further details of these irrevocable undertakings are set out at Appendix 3 to this Announcement.

In reaching its conclusion, the Board of Cambian took the following key factors into account:

· certain Cambian Shareholders, Richard Griffiths and controlled undertakings, LOAME and Teleios Capital Partners LLC have expressed a strong desire for the Transaction to proceed and have irrevocably undertaken: (a) to vote in favour of the Transaction and (b) not to elect (or to instruct or procure that there be an election) for the Full Cash Alternative in respect of 95,635,744 Cambian Shares, representing, in aggregate, approximately 51.9 per cent. of the Cambian Shares in issue on the Last Practicable Date;

· the GI Shareholders, representing, in aggregate, approximately 22.2 per cent. of the Cambian Shares as at the Last Practicable Date, do not wish to continue their shareholding in the Enlarged Group and have irrevocably undertaken to vote in favour of the Transaction and elect for the Full Cash Alternative in respect of all of their Cambian Shares; and

· Cambian Shareholders who have not entered into irrevocable undertakings, representing, in aggregate, approximately 16.1 per cent. of the Cambian Shares in issue on the Last Practicable Date, will have the choice to elect for the Full Cash Alternative in respect of any or all of their Cambian Shares or accept cash and shares in the Enlarged Group through the Headline Offer.

Each Cambian Shareholder will need to determine whether they should accept the Headline Offer or elect for the Full Cash Alternative depending on their own personal circumstances. The Cambian Board recommends that Cambian Shareholders review in detail the "Risk Factors" in the CareTech Prospectus to be circulated to Cambian Shareholders before making such decision. In particular, the Cambian Board notes that the Enlarged Group will have a higher level of leverage than that with which either CareTech or Cambian currently operates, and that there will be execution risk in combining the two businesses. Cambian Shareholders who are in any doubt about whether to accept the Headline Offer or elect for the Full Cash Alterative should seek independent professional legal and financial advice. Further details in relation to the Transaction will be contained in the Scheme Document and CareTech Prospectus to be circulated in due course.

8. Background to and reasons for the recommendation by the Cambian Directors

Following the successful sale of Cambian's Adult Services business for £379 million at the end of 2016, Cambian became a pure children's specialist education and behavioural health services business, offering a full range of essential services, from therapeutic fostering through to specialist schools and residential care. On completion of the sale, Cambian had net cash on its balance sheet of £116 million after repayment of all its outstanding bank debt of £286 million. After determining the cash amount required to develop its ongoing specialist children's services to their full potential, Cambian returned excess capital by way of a special dividend to Cambian Shareholders of approximately £50 million (27.1 pence per share) in September 2017 and approximately £15 million (8.2 pence per share) in February 2018. 

Under the terms of its sale of the Adult Services business, Cambian was required to provide significant transitional services to the purchaser throughout the first six months of 2017. As soon as this agreement ended, Cambian established its standalone platform and repositioned its business towards a differentiated integrated recovery model incorporating care, education and therapy for children with the highest needs. The senior management team was considerably strengthened, and a comprehensive three-year strategy was prepared and carefully reviewed by the Board of Cambian. The standalone strategy involved improving occupancy in its existing estate, streamlining costs, investing further in its processes and systems, improving the recruitment, retention and development of staff and, towards the end of the period, growing its facilities, both organically and through acquisition. Cambian's three-year plan was presented at the Cambian Capital Markets Day on 30 January 2018 and, if achieved, would deliver significant improvements in revenue and profits for Cambian Shareholders. On 22 June 2018, the Board of Cambian issued a trading update which noted that Cambian's trading for the five months to 31 May 2018 was in line with the Board's expectations.

On 16 March 2018, the Board of Cambian was approached by the Board of CareTech about the possible acquisition of Cambian by CareTech. At the time, the proposal from CareTech only offered Cambian Shareholders a mix of CareTech Shares and cash for their Cambian Shares. The Cambian Board felt that certain Cambian Shareholders would prefer a full cash exit and as a result any future proposal from CareTech should provide this. Following further negotiations, the Board of CareTech has proposed the Transaction, which offers a choice between the Headline Offer of cash and shares and the Full Cash Alternative. While the Cambian Board believes that Cambian is well positioned to succeed as an independent business and that, subject to execution risk, if Cambian remains an independent entity it would achieve a better return for Cambian Shareholders over the medium term than the Transaction delivers, it also believes that the Transaction accelerates the delivery of value for Cambian Shareholders and offers them an attractive choice of consideration.

· The Headline Offer provides Cambian Shareholders with an immediate return in cash of 100 pence per share and the opportunity, with the share component, to remain invested in the Enlarged Group, which will be the second largest UK social care company by revenue.

· The Full Cash Alternative of 190 pence per Cambian Share represents a valuation multiple of 14.5 times Cambian's EBITDA in 2017. At this level, the Cambian Board believes that the Full Cash Alternative will provide Cambian Shareholders with the opportunity to receive an immediate and certain amount in cash that would otherwise be unlocked over time as Cambian executes its strategy and realises its longer-term growth and margin expansion prospects, subject always to execution risks. Cambian listed the Cambian Shares on the Main Market in April 2014 at a price of 225 pence per share. The Board is pleased that the Full Cash Alternative of 190 pence per share, when combined with dividends of 3.1 pence per share paid since the listing and the return of capital by way of two special dividends of 27.1 pence and 8.2 pence per share paid in September 2017 and February 2018, will allow shareholders who subscribed in the initial public offering ("IPO") to recover in excess of the original IPO price.

9. CareTech Shareholder approval and recommendation by the CareTech Directors

Due to the size of the Transaction, it constitutes a "reverse takeover" (as defined in the AIM Rules) for CareTech.

Accordingly, CareTech will be required to seek the approval of the CareTech Shareholders at the CareTech General Meeting for the Transaction. CareTech is required to prepare and send the CareTech Prospectus to CareTech Shareholders and, also, to Cambian Shareholders. The CareTech Prospectus will include, amongst other things, details on the CareTech Shares (including the New CareTech Shares), the Enlarged Group, the background to and reasons for the Transaction and a notice convening the CareTech General Meeting.

The Transaction will be conditional upon, amongst other things, the passing by the requisite majority at the CareTech General Meeting of the CareTech Resolutions to approve the Transaction and grant the authorities for the issue and allotment of the New CareTech Shares to be issued pursuant to the Transaction and the disapplication of pre-emption rights in respect of the allotment of the New CareTech Shares. The CareTech Resolutions will all be ordinary resolutions, save for the resolution to disapply pre-emption rights which will be a special resolution.

In accordance with the AIM Rules on reverse takeovers, in addition to publishing the CareTech Prospectus, CareTech is required to apply to the London Stock Exchange for admission of the Enlarged Share Capital to trading on AIM.

It is expected that the CareTech Prospectus will be published at the same time as the Scheme Document is posted to Cambian Shareholders.

The CareTech Directors have received financial advice from Jefferies in relation to the Transaction. In providing its advice, Jefferies has relied upon the commercial assessments of the CareTech Directors.

The CareTech Directors consider the terms of the Transaction to be in the best interests of CareTech and the CareTech Shareholders taken as a whole and accordingly intend to recommend unanimously that CareTech Shareholders vote in favour of the CareTech Resolutions at the CareTech General Meeting as the CareTech Directors who hold, or are otherwise beneficially interested in, CareTech Shares have irrevocably undertaken to do in respect of the beneficial holdings which are under their control of, in aggregate, 11,266,619 CareTech Shares (representing, in aggregate, approximately 14.9 per cent. of the CareTech Shares at the Last Practicable Date).

Further details of these irrevocable undertakings are set out in Appendix 3 to this Announcement.

10. Information relating to CareTech and its current trading

CareTech is a leading provider of specialist social care services, supporting adults and children with a wide range of complex needs in 292 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, specialist services, young people residential services, foster care and learning services which come under the two outcome-based sectors of Adult Services and Young People Services.

CareTech was founded in 1993 and began trading on AIM in October 2005 under the ticker symbol CTH. Its property portfolio comprises 205 freehold properties.

CareTech established the CareTech Charitable Foundation (the "Foundation") in 2017 and makes annual donations to the Foundation. The work of the Foundation focuses on three key objectives: (i) physical and learning disabilities and specialist services support, (ii) skills development for the care sector and (iii) supporting communities and the CareTech family (the "Objectives").

The Foundation delivers the Objectives through three key approaches: (i) providing grants to significant partnerships; (ii) match-funding to amounts raised by individual CareTech employees for charitable causes in line with the Objectives; and (iii) family and friends grants to support the family, friends and wider communities of CareTech staff facing significant challenges.

As at close of trading on the Last Practicable Date, CareTech had a market capitalisation of approximately £283 million.

Current trading

As stated in its results for the six-month period to 31 March 2018 (the "CareTech Interim Results"), CareTech delivered a strong set of results for that period. CareTech Group revenue in the half year grew by 11.2 per cent. to £87.6 million (H12017: £78.8 million) and delivered an underlying EBITDA of £19.5 million (H12017: £18.3 million), representing growth of 6.6 per cent. CareTech Group Revenue and EBITDA excluding learning services would have grown on a like for like basis by 9.8 per cent. and 7.5 per cent. respectively stripping out the effect of the 2017 acquisition.

CareTech now continues to realise the benefit of organisational improvements that were put in place over the past few years. In the half year, CareTech continued to strengthen the management structure and improve the efficiency of processes following further investment in new systems which will continue going forwards. The recent appointments have put CareTech in a strong position to benefit organically from a number of commissioning opportunities by working in partnership with the NHS and Local Authorities especially in light of Joint Commissioning currently being developed.

Since the publication of the CareTech Interim Results, trading has continued to be in line with expectations.

11. Information relating to Cambian and its current trading

Cambian is the largest provider of specialist education and behavioural health services for children in the UK. The Cambian Group's services have a specific focus on individuals who present with high severity needs, challenging behaviours and who have complex care requirements.

Cambian provides services to almost 2,000 children and young people across 222 locations. Cambian works with the majority of local authorities in England and Wales and employs more than 4,500 people.

Cambian was founded in 2004 and began trading on the Main Market in April 2014 under the ticker symbol CMBN.

Current trading

As stated in its results for the twelve-month period to 31 December 2017 (the "Cambian Full-Year Results"), Cambian delivered a strong set of results for that period. Cambian's revenue in the full year grew by 7.6 per cent. to £196.0 million (FY2016: £182.1 million) and delivered an adjusted EBITDA of £18.7 million (FY2016: £16.2 million), representing growth of 15.4 per cent.

Management has spent considerable time repositioning the business towards a differentiated integrated recovery model incorporating care, education and therapy for children with the highest needs, and this process is now nearly complete. The transformation has led to a review of the strength of the management team and its ability to deliver acute services, as a result of which the management team has been further strengthened by a number of senior hires.

In light of these changes, Cambian now expects to benefit from an increased fee level associated with higher acuity services. This is further supplemented by the significant cost-cutting exercise which was conducted in 2017 and resulted in approximately £8.5 million of cost reduction on an annualised basis.

Since the publication of the Cambian Full-Year Results, trading has continued to be in line with expectations.

12. Irrevocable undertakings in relation to the Transaction

CareTech has procured irrevocable undertakings from Cambian Directors to vote their own beneficial holdings of Cambian Shares in favour of the Scheme at the Court Meeting and the Cambian Resolutions in respect of an aggregate of 2,226,878 Cambian Shares representing, in aggregate, approximately 1.2 per cent. of the Cambian Shares in issue on the Last Practicable Date.

In addition to the irrevocable undertakings from Cambian Directors, CareTech has received irrevocable undertakings from certain other Cambian Shareholders to vote in favour of the Scheme at the Court Meeting and to vote in favour of the Cambian Resolutions in respect of an aggregate of 145,367,063 Cambian Shares representing, in aggregate, approximately 78.9 per cent. of the Cambian Shares in issue on the Last Practicable Date.

In total, therefore, CareTech has received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the Cambian Resolutions in respect of an aggregate of 147,593,941 Cambian Shares representing, in aggregate, approximately 80.1 per cent. of the Cambian Shares in issue on the Last Practicable Date.

Certain Cambian Shareholders who, in aggregate, hold 111,470,489 Cambian Shares representing, in aggregate, approximately 60.5 per cent. of the Cambian Shares in issue on the Last Practicable Date have irrevocably undertaken to make no election (or to instruct or procure that no election is made) under the Full Cash Alternative in respect of any of their Cambian Shares and, accordingly, should the Scheme become Effective, will receive the New CareTech Shares and the cash consideration in accordance with the Headline Offer in respect of all of their Cambian Shares.

The GI Shareholders who, in aggregate, hold 40,819,536 Cambian Shares, representing, in aggregate, approximately 22.2 per cent. of the Cambian Shares in issue on the Last Practicable Date have irrevocably undertaken to elect for the Full Cash Alternative in respect of all of their Cambian Shares and, accordingly, should the Scheme become Effective, they will each receive all cash consideration instead of the cash and the New CareTech Shares to which they would have been entitled under the Headline Offer.

Cambian has procured irrevocable undertakings from CareTech Directors to vote their own beneficial holdings of CareTech Shares in favour of the CareTech Resolutions in respect of an aggregate of 11,266,619 CareTech Shares representing, in aggregate, approximately 14.9 per cent. of the CareTech Shares in issue on the Last Practicable Date.

In addition to the irrevocable undertakings from the CareTech Directors:

· CareTech and Cambian have received an irrevocable undertaking from Stichting Value Partners Family Office; and

· CareTech has received an irrevocable undertaking from Liontrust,

to vote in favour of the CareTech Resolutions at the CareTech General Meeting in respect of 20,731,157 CareTech Shares representing, in aggregate, approximately 27.4 per cent. of the CareTech Shares in issue on the Last Practicable Date.

Further details of these irrevocable undertakings are set out in Appendix 3 of this Announcement.

13. Offer-related arrangements

Confidentiality Agreement

CareTech and Cambian entered into the Confidentiality Agreement on 19 April 2018 pursuant to which CareTech and Cambian have undertaken to each other to keep information provided to each other in connection with the Transaction confidential and not to disclose it to third parties (other than to permitted recipients) unless required by law or regulation.

Subject to certain exceptions, the Confidentiality Agreement also prohibits CareTech from, for a period of 12 months from the date of the agreement: (i) having contact with any shareholder, director, employee or customer of the Cambian Group; and (ii) soliciting any director, officer or certain senior employees of the Cambian Group. 

The Confidentiality Agreement includes standstill obligations which, subject to certain exceptions and for a period of 6 months from the date of the agreement, prohibit CareTech from, amongst other things, acquiring, offering to acquire or announcing any offer to acquire any Cambian Shares.

The confidentiality obligations of each of Cambian and CareTech will terminate on the earlier of: (i) Completion; and (ii) the second anniversary of the date of the agreement.

Clean Team Agreement

CareTech and Cambian entered into a clean team agreement on 10 July 2018, which sets out how any information which is commercially and/or competitively sensitive to Cambian may be shared with CareTech to assist CareTech's evaluation and negotiation of the Transaction.

Co-operation Agreement

CareTech and Cambian have entered into the Co-operation Agreement to record the steps that each has agreed to take in relation to the implementation of the Transaction.

CareTech has agreed that, if it makes a filing to the CMA, it will use all reasonable endeavours to persuade the CMA not to make a Phase 2 CMA Reference. In addition, CareTech has agreed to involve Cambian in any filing it makes to the CMA in relation to the Transaction and Cambian has agreed to provide information and assistance to CareTech in relation to such filing.

CareTech has agreed to provide information about itself and the CareTech Directors necessary for the purposes of Cambian publishing the Scheme Document. CareTech has also agreed to consult Cambian in relation to preparing the CareTech Prospectus, while Cambian has agreed to provide information about the Cambian Group and the Cambian Directors required by CareTech for the CareTech Prospectus. CareTech has agreed to use all reasonable endeavours to obtain the approval of the CareTech Prospectus by the UK Listing Authority no later than 20 September 2018 (or such other date as agreed by CareTech and Cambian).

While it is the intention of the parties that the Transaction is implemented through the Scheme, CareTech may, with the consent of the Panel, elect to implement the Transaction through the Takeover Offer if: (a) Cambian agrees; (b) a third party announces a firm intention to make an offer for Cambian; or (c) the Cambian Directors withdraw or adversely qualify their recommendation of the Transaction.

If the Co-operation Agreement is terminated by either party in certain circumstances, including because: (a) the CareTech Board either does not recommend, or withdraws or adversely qualifies its recommendation of, the Transaction; (b) the CareTech Shareholders do not approve the CareTech Resolutions before 31 October 2018; (c) CareTech invokes, with the consent of the Panel, any of the Conditions in paragraphs 2(b) to 2(g) of Appendix 1; or (d) the Transaction lapses pursuant to Rule 12 of the Code, CareTech will pay to Cambian a break fee of £1.75 million (plus VAT if applicable) unless certain other termination events have arisen before then (and whether or not the Co-operation Agreement has been terminated as a result of any such event); including if: (a) Cambian does not prosecute the Transaction by certain dates; (b) the Board of Cambian does not recommend, or changes its recommendation of, the Transaction; (c) the Scheme is voted down by Cambian Shareholders; (d) a competing offer for Cambian completes; or (e) the Effective Date has not occurred before the Long Stop Date.

The Co-operation Agreement sets out the agreement between the parties in relation to participants in the Cambian Share Plans, summarised in paragraph 18. It also sets out arrangements relating to employees, including, provisions relating to the effect of the Transaction on awards under the Cambian Group annual bonus plan and the notice provisions of certain key employees if their employment is terminated within the 3 month period after the Effective Date.

14. Interests in Cambian Shares

Save for the irrevocable undertakings referred to in paragraph 12 and save as otherwise disclosed in this Announcement, as at the Last Practicable Date, neither CareTech, nor any of the CareTech Directors, nor, so far as the CareTech Directors are aware, any person acting in concert (within the meaning of the Takeover Code) with CareTech for the purpose of the Transaction:

· has any interest in, or right to subscribe for, any Cambian Shares nor does any such person have any short position in Cambian Shares (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell, any delivery obligation or right to require another person to purchase or take delivery of Cambian Shares; or

· has borrowed or lent any Cambian Shares or securities convertible or exchangeable into Cambian Shares; or

· is party to any dealing arrangement of the kind referred to in Note 11 on the definition of acting in concert in the Takeover Code in relation to Cambian Shares or securities convertible or exchangeable into Cambian Shares.

Westminster Holdings Limited, a concert party of CareTech, holds 1,439,495 Cambian Shares, representing, approximately 0.8 per cent. of the Cambian Shares in issue on the Last Practicable Date.

15. Structure of the Transaction

Scheme

It is intended that the Transaction will be implemented by way of a Court-sanctioned scheme of arrangement of Cambian under Part 26 of the Companies Act. The Scheme is an arrangement between Cambian and the Scheme Shareholders to which CareTech will adhere and is subject to the approval of the Court.

The purpose of the Scheme is to enable CareTech to become the holder of the entire issued ordinary share capital of Cambian at Completion. This is to be achieved by the transfer by Scheme Shareholders of the Scheme Shares to CareTech in consideration for which the Scheme Shareholders on the register of members at the Scheme Record Time will receive the consideration on the basis set out in paragraph 2 of this Announcement. The procedure involves, amongst other matters, applications by Cambian to the Court to convene the Court Meeting and to sanction the Scheme.

The Scheme Document will include full details of the Scheme, together with notice of the Court Meeting and the Cambian General Meeting. The Scheme Document will also specify the actions available to be taken by the Scheme Shareholders. It is expected that the Scheme Document, containing further information about the Transaction and notices of the Court Meeting and Cambian General Meeting, together with the relevant Forms of Proxy and a Form of Election, will be published and posted to Cambian Shareholders as soon as practicable and, in any event, within 28 days of this Announcement (or such later date as is agreed between CareTech, Cambian and the Panel).

Conditions

The Transaction is subject to the Conditions and further terms set out in Appendix 1 to this Announcement and to be set out in the Scheme Document and will only become Effective if, amongst other things, the following events occur on or before the Long Stop Date:

· a resolution to approve the Scheme is passed at the Court Meeting by a majority in number representing not less than 75 per cent. in value of the Scheme Shareholders who are on the register of members of Cambian at the Voting Record Time, present and voting, whether in person or by proxy, at the Court Meeting;

· each of the Cambian Resolutions necessary to implement the Scheme is passed by the requisite majority of Cambian Shareholders at the Cambian General Meeting;

· each of the CareTech Resolutions is passed by the requisite majority of CareTech Shareholders at the CareTech General Meeting;

· Admission of the Enlarged Share Capital;

· the Scheme is sanctioned by the Court; and

· a copy of the Court Order is delivered to the Registrar of Companies.

If any Condition in paragraph 1(a) of Appendix 1 to this Announcement is not capable of being satisfied by the date specified therein, CareTech shall make an announcement through a Regulatory Information Service as soon as practicable and, in any event, by not later than 7.00 a.m. on the Business Day following the date so specified, stating whether CareTech has invoked that Condition, (where applicable) waived that Condition or, with the agreement of Cambian, specified a new date by which that Condition must be satisfied.

Scheme becoming Effective

Once the necessary approvals from Cambian and CareTech Shareholders have been obtained and the other Conditions have been satisfied or (where applicable) waived and the Scheme has been approved by the Court, the Scheme will become effective upon delivery of the Court Order to the Registrar of Companies. Subject to the satisfaction of the Conditions or (where applicable) waiver, the Scheme is expected to become Effective in Q4 2018.

Upon the Scheme becoming Effective: (i) it will be binding on all Cambian Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the Cambian General Meeting (and, if they attended and voted, whether or not they voted in favour); and (ii) share certificates in respect of Cambian Shares will cease to be valid and entitlements to Cambian Shares held in CREST will be cancelled.

The cash and share consideration payable under the Transaction will be despatched by CareTech to Scheme Shareholders as soon as possible and no later than 14 days after the Effective Date. Further details in relation to settlement of the cash and share consideration payable under the Transaction for Scheme Shares held both in certificated and uncertificated form will be set out in the Scheme Document that will be circulated to Cambian Shareholders.

16. Management, employees, research and development and locations

Employees and management

The Board of CareTech attaches great importance to the skills and experience of the existing management and employees of CareTech and Cambian and believes that the Enlarged Group would offer employees greater opportunities than would be available if the Transaction did not proceed.

The existing executive directors of CareTech will remain as executive directors of the Enlarged Group. Accordingly, the executive directors of the Enlarged Group will comprise Farouq Sheikh (as Executive Chairman of the Enlarged Group), Haroon Sheikh (as CEO of the Enlarged Group) and Michael Hill (as CFO of the Enlarged Group).

John Ivers will be the COO of the CareTech operations within the Enlarged Group. Joining the senior management team of the Enlarged Group from Cambian will be Anne Marie Carrie (as COO of the Cambian operations within the Enlarged Group), who will report to Haroon Sheikh.

Saleem Asaria, the CEO of Cambian and Anoop Kang, the CFO of Cambian, have agreed to step down from their current roles on the Effective Date. In the case of Anoop Kang, he will provide services to the Enlarged Group for a period of 6 months after the Effective Date on terms which are to be agreed between him and CareTech.

Cambian has agreed that both Saleem Asaria and Anoop Kang will, in line with Anne Marie Carrie, the other Cambian executive director and Cambian's senior executives, receive an annual bonus for 2018 payable on or immediately following the Effective Date based on performance and pro-rated to the Effective Date. In addition, Saleem Asaria and Anoop Kang will receive the payment in lieu of notice to which they are entitled under their service contracts, which will be paid as a lump sum immediately following the Effective Date.

The options held by Saleem Asaria and Anoop Kang under the Cambian Share Plans will be treated in the same way as all other options and subject to the rules of the Cambian Share Plans and the Cambian Directors' remuneration policy.

Karl Monaghan, James Cumming and Michael Adams will remain as non-executive directors on the Board of CareTech. It is CareTech's intention to add two additional non-executive directors to its Board within three months of Completion. Alongside these additional non-executive appointments, it is expected that Michael Adams will become an executive director of the Enlarged Group.

Each of the non-executive directors of Cambian has confirmed that he intends to resign from the Cambian Board conditional upon, and with effect from, Completion.

The Board of CareTech is confident that the integration of the two businesses can be achieved without undue disruption to the underlying operations of each business and it is not intended for there to be any material change to CareTech's or Cambian's current operational sites.

CareTech also recognises that in order to achieve the planned benefits of the Transaction, including any available cost synergies, operational restructuring is likely to be required. Although integration plans have yet to be finalised, and any final decision will be subject to engagement with appropriate stakeholders, this is likely to lead to redundancies where the businesses have overlapping functions (such as in their respective head offices). 

It is expected that, following the Effective Date, there will be a net reduction in the number of full-time equivalent employees of the Enlarged Group, which will principally be as a result of the proposed head office rationalisation. The number of employees affected will be confirmed after Completion but CareTech believes that the total headcount reduction will be less than 0.5 per cent. of the Enlarged Group's estimated employee base at Completion.

Existing rights and pensions

CareTech has given assurances to the Cambian Directors that, on the Transaction becoming Effective, the existing employment rights, including pension rights, of all Cambian Group employees will be observed at least to the extent required by applicable law.

CareTech's plans for Cambian do not involve any material change in the conditions of employment of Cambian Group employees or the balance of skills and functions of the Cambian employees (save in respect of the proposed head office rationalisation referred to above).

Incentivisation arrangements

CareTech currently operates a tax-advantaged and non-tax-advantaged discretionary company share option plan (the "CSOP") and a tax-advantaged all-employee save-as-you-earn share option scheme (the "Sharesave Scheme" and together with the CSOP, the "CareTech Option Schemes"). The CareTech Option Schemes are operated for the benefit of selected and eligible employees within the CareTech Group. From Completion, all employees within the Enlarged Group shall be eligible to be invited to participate in the CareTech Option Schemes in respect of any future grant, subject to (in the case of the CSOP) the discretion of the remuneration committee of the Board of CareTech and the satisfaction of any eligibility criteria which must be satisfied under the CareTech Option Schemes.

Following Completion, CareTech intends to review the management, governance and incentive structure of CareTech. CareTech has not entered into, and has not had discussions on proposals to enter into, any form of incentivisation arrangements with members of Cambian's management, but may put in place incentive arrangements for certain members of the Cambian management team before and/or following Completion.

Locations, headquarters and research and development

The headquarters of CareTech will be retained as the headquarters of the Enlarged Group. It is intended that in due course that the current headquarters of Cambian will be vacated.

CareTech has no intention to change any of the other principal locations of the Cambian Group's business nor to redeploy any of the fixed assets of the Cambian Group.

Cambian does not operate a research and development function, so CareTech is making no statement in this regard under Rule 24.2(a)(i) of the Takeover Code.

Trading facilities

It is intended that after the Scheme has become Effective, the listing of the Cambian Shares on the Official List will be cancelled and the Cambian Shares will cease to be admitted to trading on the Main Market.

No statements in this paragraph 16 are "post-offer undertakings" for the purpose of Rule 19.5 of the Takeover Code.

17. Dividend and dividend policy

CareTech intends to apply its existing progressive dividend policy to the Enlarged Group.

The New CareTech Shares will be issued credited as fully paid and will rank pari passu in all respects with the Existing CareTech Shares, including the right to receive and retain in full all dividends and other distributions (if any) made, paid or declared by reference to a record date falling after the Effective Date (excluding the interim dividend of 3.50 pence (net) per share in respect of the year ending 30 September 2018 expected to be paid on 23 November 2018). The New CareTech Shares will be issued in registered form and will be capable of being held in both certificated and uncertificated form. The New CareTech Shares will trade under the same ISIN number as the Existing CareTech Shares.

18. Cambian Share Plans

Participants in the Cambian Share Plans will be contacted separately regarding the effect of the Transaction on their rights under the Cambian Share Plans and with the details of CareTech's appropriate proposals in respect of their options.

In summary, all outstanding options under the Cambian Share Plans will vest in full when the Court sanctions the Scheme. For the 2014 Long-Term Incentive Plan ("LTIP") only, this is based on the exercise of discretion by the Cambian remuneration committee that the applicable performance conditions (as amended to reflect the shortened performance period) have been met and time pro-rating shall not apply.

Participants in the Cambian Share Plans will have one month from the date that the Court sanctions the Scheme to exercise their options.

As an alternative, participants holding options in the LTIP will be offered the opportunity to receive an amount equal to the Full Cash Alternative per vested Cambian Share in respect of 50 per cent. of the total number of vested Cambian Shares held under an outstanding LTIP option and to release and rollover the remaining 50 per cent. of vested Cambian Shares under an outstanding LTIP option in consideration of the grant of equivalent new options over CareTech Shares ("New Options"). The New Options will vest six months after the Effective Date and will be subject to the rules of the LTIP except that no performance conditions, leaver provisions or time pro-rating will apply to the New Options.

Further details of the terms of such proposals will be included in the Scheme Document and in separate documentation to be sent to participants in the Cambian Share Plans at the same time as the Scheme Document is sent.

The Transaction will extend to any Cambian Shares which are unconditionally allotted, issued or transferred to satisfy the exercise of existing options under the Cambian Share Plans before the Scheme Record Time.

19. Delisting and cancellation of trading of Cambian Shares and re-registration of Cambian

Cambian intends, prior to the Scheme becoming Effective, to make an application to the UKLA and the London Stock Exchange, respectively, for the cancellation of the admission of Cambian Shares to the premium listing segment of the Official List and to trading on the Main Market, in each case to take effect from or shortly after the Effective Date.

The last day of dealings in Cambian Shares on the Main Market is expected to be the Business Day immediately prior to the Effective Date and no transfers will be registered after 6.30 p.m. on that date. On the Effective Date, share certificates in respect of Cambian Shares will cease to be valid and entitlements to Cambian Shares held within the CREST system will be cancelled.

If the Transaction is effected by way of a Takeover Offer, it is anticipated that the cancellation of Cambian's listing on premium listing segment of the Official List and admission to trading on the Main Market will take effect no earlier than 20 Business Days following the date on which the Takeover Offer becomes or is declared unconditional in all respects provided CareTech has obtained 75 per cent. or more of the voting rights of Cambian.

The Cambian Resolutions are expected to contain a resolution to re-register Cambian as a private company, conditional on the Scheme becoming Effective. Therefore, on or shortly after the Effective Date, Cambian is expected to be re-registered as a private company.

Delisting will significantly reduce the liquidity and marketability of Cambian Shares. If the Transaction is effected by way of a Takeover Offer and such offer becomes or is declared unconditional in all respects and sufficient acceptances are received, CareTech intends to exercise its rights to acquire compulsorily the remaining Cambian Shares in respect of which the offer has not been accepted.

20. Admission to AIM and commencement of dealings in New CareTech Shares

The New CareTech Shares are not being offered to the public by means of this Announcement. This Announcement is an advertisement and does not constitute a prospectus or prospectus equivalent document or an offer or an invitation to purchase or subscribe for any securities.

The Scheme is conditional on, among other things, Admission.

Following publication of the CareTech Prospectus, an application, conditional on the Scheme becoming Effective, will be made to the London Stock Exchange for the CareTech Shares in issue upon the Scheme becoming Effective (including the New CareTech Shares) to be admitted or re-admitted (as applicable) to trading on AIM. It is expected that Admission will become effective, and that dealings for normal settlement in the New CareTech Shares will commence at 8.00 a.m. on the first Business Day following the date on which the Scheme becomes Effective.

Details of how Cambian Shareholders resident in the United Kingdom can hold, access and trade CareTech Shares will be set out in the Scheme Document. Shareholders resident in the United Kingdom will be able to hold their CareTech Shares through any of the ways currently available to CareTech Shareholders, including through an intermediary of their own choice should they wish to do so.

Within the medium term following Completion, it is CareTech's ambition to apply for admission to the premium listing segment of the Official List and to trading on the Main Market.

21. Fractional entitlements

Fractions of pence will not be paid to Scheme Shareholders and cash entitlements will be rounded down to the nearest penny. Fractions of New CareTech Shares will not be allotted or issued to Scheme Shareholders and entitlements will be rounded down to the nearest whole number of CareTech Shares and all fractions of New CareTech Shares will be aggregated and sold in the market as soon as practicable after the Effective Date. The net proceeds of such sale (after deduction of all expenses and commissions incurred in connection with the sale) will be distributed by CareTech in due proportions to Scheme Shareholders who would otherwise have been entitled to such fractions, save that individual entitlements to amounts of less than £5 will be retained for the benefit of the Enlarged Group.

22. Overseas Shareholders

Restrictions relating to certain Overseas Shareholders

Overseas Shareholders may be affected by the laws of other jurisdictions in relation to the Transaction or the Scheme. Overseas Shareholders should inform themselves about and observe all applicable legal requirements.

The availability of the Transaction and the New CareTech Shares, to be issued and allotted under the Transaction, to persons who are not resident in, and the distribution of this Announcement to persons who are not resident in, the United Kingdom (including the ability to make valid elections for the Full Cash Alternative) may be affected by the laws of the relevant jurisdiction in which such persons are located. Such persons should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdiction. Cambian Shareholders who are in any doubt regarding such matters should consult an appropriate independent professional adviser in the jurisdiction without delay.

Further details in relation to the treatment of Overseas Shareholders for the purpose of the Transaction will be contained in the Scheme Document.

US Shareholders

The New CareTech Shares issued pursuant to the terms of the Transaction have not been and will not be registered under the US Securities Act or under the securities laws of any state or other jurisdiction of the United States and may not be offered or sold in the United States absent registration or an exemption from registration under the US Securities Act.

General

This Announcement has been prepared for the purposes of complying with English law, the Takeover Code and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.

23. General

CareTech reserves the right to elect, with the consent of the Panel and in accordance with the Co-operation Agreement, to implement the acquisition of the Cambian Shares by way of a Takeover Offer as an alternative to the Scheme. In such event, the Transaction will be implemented by CareTech and/or one or more wholly-owned subsidiaries of CareTech on substantially the same terms as those which would apply to the Scheme (subject to such amendments as are appropriate for an acquisition being made by way of takeover offer under Part 28 of the Companies Act, including, if the Panel so agrees, an acceptance condition set at up to 90 per cent. of the shares to which such Takeover Offer relates or at such other lower percentage as CareTech may, with the agreement of Cambian and subject to the rules of the Takeover Code and with the consent of the Panel, decide, provided that if it became or was declared unconditional in all respects, the Transaction would result in CareTech holding Cambian Shares carrying greater than 50 per cent. of the voting rights in Cambian).

The Transaction will be subject to the Conditions and certain further terms set out in Appendix 1 and to the full terms and conditions to be set out in the Scheme Document, Forms of Proxy and Form of Election.

Appendix 2 contains the sources and bases of certain information contained in this Announcement. 

Appendix 3 contains details of the irrevocable undertakings received by CareTech and Cambian (as applicable). 

Appendix 4 Part A contains the statement made by the CareTech Directors on the anticipated quantified financial benefits of the Transaction together with the relevant bases of belief (including sources of information and principal assumptions) supporting the statement and their analysis and explanation of the underlying constituent elements. Parts B and C respectively contain the related reports from CareTech's reporting accountants, Grant Thornton, and financial adviser, Jefferies.

For the purpose of Rule 28 of the Takeover Code, the Quantified Financial Benefits Statement contained in this Announcement is the responsibility of CareTech and the CareTech Directors. Each of Grant Thornton and Jefferies has given and not withdrawn its consent to the publication of its reports in this Announcement in the form and context in which they are included.

Appendix 5 contains the definitions of certain terms used in this Announcement.

The Scheme will be governed by English law and will be subject to the jurisdiction of the courts of England and Wales. The Scheme will be subject to the applicable requirements of the Takeover Code, the Panel, the London Stock Exchange and the FCA.

Jefferies, Panmure Gordon, Rothschild, Investec and J.P. Morgan Cazenove have each given and not withdrawn their consent to the publication of this Announcement with the inclusion herein of the references to their names in the form and context in which they appear.

24. Documents

Copies of the following documents will, in accordance with Rule 26.2 of the Takeover Code, by no later than noon on 17 August 2018 until the end of the Offer Period, be available on CareTech's website at http://www.caretech-uk.com and on Cambian's website at https://www.cambiangroup.com, subject, in each case, to certain restrictions relating to persons resident in Restricted Jurisdictions:

(a) this Announcement;

(b) the Confidentiality Agreement;

(c) the Clean Team Agreement;

(d) the Co-operation Agreement;

(e) the irrevocable undertakings referred in paragraphs 9 and 12 above; and

(f) documents relating to the financing of the Transaction referred to in paragraph 4 above.

The content of the websites referred to in this Announcement are not incorporated into and do not form part of this Announcement.

25. General

Enquiries:

Ashurst LLP and Charles Russell Speechlys LLP are retained as legal advisers to CareTech.

Clifford Chance LLP and Trowers & Hamlins LLP are retained as legal advisers to Cambian.

Cambian Legal Entity Identifier: 213800DN7U5XDQL1Q343

Classification: 2.2

Further information

This Announcement is for information purposes only and is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the Transaction or otherwise, nor shall there be any sale, issuance or transfer of securities of Cambian or CareTech in any jurisdiction pursuant to the Transaction in contravention of applicable law.

The Transaction will be implemented solely pursuant to the Scheme Document to be distributed to Cambian Shareholders, which, together with the Forms of Proxy and the Form of Election will contain the full terms and conditions of the Transaction including details of how to vote in respect of the Transaction and how to make an election under the Full Cash Alternative. Any vote in respect of the Scheme or other response in relation to the Transaction should be made only on the basis of the information contained in the Scheme Document and the CareTech Prospectus.

Cambian will prepare the Scheme Document to be distributed to Cambian Shareholders and CareTech will prepare the CareTech Prospectus to be distributed to CareTech Shareholders and Cambian Shareholders. Cambian urges Cambian Shareholders to read the Scheme Document and the CareTech Prospectus when they become available because they will contain important information in relation to the Transaction, the New CareTech Shares, Admission and the Enlarged Group. CareTech urges CareTech Shareholders to read the CareTech Prospectus when it becomes available because it will contain important information in relation to the Transaction, the New CareTech Shares, Admission and the Enlarged Group. Any vote in respect of the Scheme or other response in relation to the Transaction should be made only on the basis of the information contained in the Scheme Document, or the CareTech Prospectus, as appropriate.

This Announcement does not constitute a prospectus or prospectus equivalent document.

Important notices

Jefferies International Limited, which is regulated in the United Kingdom by the Financial Conduct Authority, is acting as financial adviser exclusively for CareTech and no one else in connection with the matters set out in this Announcement. In connection with such matters, Jefferies will not regard any other person as its client and will not be responsible to anyone other than CareTech for providing the protections afforded to clients of Jefferies or for providing advice in relation to the contents of this Announcement or any other matter referred to herein. Neither Jefferies nor any of its subsidiaries, affiliates or branches owes or accepts any duty, liability or responsibility whatsoever (whether direct, indirect, consequential, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Jefferies in connection with this Announcement, any statement contained herein or otherwise.

Panmure Gordon (UK) Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for CareTech and no one else in connection with the matters set out in this Announcement and will not be responsible to anyone other than CareTech for providing the protections afforded to clients of Panmure Gordon, nor for providing advice in relation to the matters set out in this Announcement or any matters referred to in this Announcement.

N.M. Rothschild & Sons Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Cambian and for no one else in connection with the subject matter of this Announcement and will not be responsible to anyone other than Cambian for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this Announcement.

Investec Bank plc, which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority, is acting exclusively for Cambian and no one else in connection with the subject matter of this Announcement and will not be responsible to anyone other than Cambian for providing the protections afforded to clients of Investec nor for giving advice in relation to the subject matter of this Announcement or any other matter or arrangement referred to in this Announcement.

J.P. Morgan Securities plc, which conducts its UK investment banking business as J.P. Morgan Cazenove, is authorised in the United Kingdom by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. J.P. Morgan Cazenove is acting as financial adviser exclusively for Cambian and no one else in connection with the Transaction and will not regard any other person as its client in relation to the Transaction and will not be responsible to anyone other than Cambian for providing the protections afforded to clients of J.P. Morgan Cazenove or its affiliates, nor for providing advice in connection with the Transaction or any other matter or arrangement referred to in this Announcement.

Forward-looking statements

This Announcement contains statements about the Wider CareTech Group, the Wider Cambian Group and the Enlarged Group that are or may be forward looking statements. All statements other than statements of historical facts included in this Announcement may be forward looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "should", "continue", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects", "ambition" or words or terms of similar substance or the negative thereof, are forward looking statements. Forward looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of the Wider Cambian Group's, the Wider CareTech Group's or the Enlarged Group's operations and potential synergies resulting from the Transaction; and (iii) the effects of government regulation on the Wider Cambian Group's, the Wider CareTech Group's or the Enlarged Group's business.

Such forward looking statements involve risks and uncertainties that could significantly affect expected results and are based on assumptions and assessments made by CareTech and/or Cambian in light of their experience and their perception of historical trends, current conditions, future developments and other factors they believe appropriate. Many factors could cause actual results to differ materially from those projected or implied in any forward looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements, which speak only as of the date hereof. Neither the Wider Cambian Group nor the Wider CareTech Group assume any obligation to update any forward looking or other statements contained herein, except as required by applicable law or regulation.

Quantified Financial Benefits Statement

Statements of estimated cost savings and synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, the cost savings and synergies referred to may not be achieved, may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. No statement in the Quantified Financial Benefits Statement, or this Announcement generally, should be construed as a profit forecast, or interpreted to mean that the Enlarged Group's earnings or earnings per share in the first full year following Completion, or in any subsequent period, would necessarily match or be greater than or be less than those of CareTech and/or Cambian for the relevant preceding financial period or any other period. For the purpose of Rule 28 of the Takeover Code, the Quantified Financial Benefits Statement contained in this Announcement is the responsibility of CareTech and the CareTech Directors.

Disclosure requirements of the Takeover Code

Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following this Announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following this Announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0) 20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Rule 2.9 information

In accordance with Rule 2.9 of the Takeover Code, CareTech confirms that, as at the date of this Announcement, it has in issue 75,691,423 ordinary shares of 0.5 pence each. A concert party of CareTech holds 1,439,495 shares of 1 pence each in Cambian. CareTech does not hold any ordinary shares in treasury. The International Securities Identification Number (ISIN) for CareTech's ordinary shares is GB00B0KWHQ09.

In accordance with Rule 2.9 of the Takeover Code, Cambian confirms that, as at the date of this Announcement, it has in issue 184,198,746 ordinary shares of 1 pence each. Cambian does not hold any ordinary shares in treasury. The International Securities Identification Number (ISIN) for Cambian's ordinary shares is GB00BKXNB024.

Overseas Jurisdictions

The release, publication or distribution of this Announcement in or into certain jurisdictions may be restricted by the laws of those jurisdictions. Accordingly, copies of this Announcement and all other announcements and documentation relating to the Transaction are not being, and must not be, released, published, mailed or otherwise forwarded, distributed or sent in, into or from any jurisdiction where to do so would violate the laws of that jurisdiction or any Restricted Jurisdiction. Persons receiving such announcements or documentation (including, without limitation, nominees, trustees and custodians) should inform themselves of, and observe, these restrictions. Failure to do so may constitute a violation of the securities laws of any such jurisdiction. In particular, the ability of persons who are not resident in the United Kingdom or who are subject to the laws of another jurisdiction to vote their Cambian Shares in respect of the Scheme at the Court Meeting, to elect for the Full Cash Alternative, or to execute and deliver Forms of Proxy appointing another to vote at the Court Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located or to which they are subject. To the fullest extent permitted by applicable law, the companies involved in the Transaction disclaim any responsibility or liability for the violations of any such restrictions by any person.

This Announcement has been prepared for the purposes of complying with English law, the rules of the London Stock Exchange and the Takeover Code and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws and regulations of any jurisdictions outside England and Wales.

If the Transaction is implemented by way of an Offer (unless otherwise determined by CareTech and permitted by applicable law and regulation), the Offer may not be communicated, directly or indirectly, in or into or by the use of the mails of, or by any other means or instrumentality (including, without limitation, by mail, telephonically or electronically by way of internet or otherwise) of interstate or foreign commerce of, or any facilities of a national, state or securities exchange of, any Restricted Jurisdiction and the Offer may not be capable of acceptance by any such use, means, instrumentality or otherwise.

The Transaction relates to the acquisition of shares of a UK company and is proposed to be effected by means of a scheme of arrangement under the laws of England and Wales. A transaction effected by means of a scheme of arrangement is not subject to proxy solicitation or tender offer rules under the US Exchange Act. Accordingly, the Transaction is subject to the disclosure requirements, rules and practices applicable in the United Kingdom to schemes of arrangement, which differ from the requirements of US proxy solicitation or tender offer rules. However, if CareTech were to elect, with the consent of the Panel, and, in certain circumstances, the consent of Cambian to implement the Transaction by means of a Takeover Offer, such Takeover Offer will be made in compliance with all applicable laws and regulations, including Section 14(e) of the US Exchange Act and Regulation 14E thereunder.

Such a Takeover Offer would be made in the United States by CareTech and no one else. In addition to any such Takeover Offer, any affiliates of CareTech's financial advisers, CareTech, its affiliates, any affiliates of Cambian's financial advisers or their respective affiliates, may make certain purchases of, or arrangements to purchase, shares in Cambian outside such Takeover Offer during the period in which such Takeover Offer would remain open for acceptance. If such purchases or arrangements to purchase were to be made they would be made outside the United States and would comply with applicable law, including the US Exchange Act. Any information about such purchases will be disclosed as required in the United Kingdom, will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website: www.londonstockexchange.com, or otherwise by press release.

The financial information included in this Announcement has been prepared in accordance with accounting standards applicable in the United Kingdom and thus may not be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the United States.

If the Transaction is implemented by way of a Takeover Offer (unless otherwise determined by CareTech and permitted by applicable law and regulation), the Takeover Offer may not be communicated, directly or indirectly, in or into or by the use of the mails of, or by any other means or instrumentality (including, without limitation, by mail, telephonically or electronically by way of internet or otherwise) of interstate or foreign commerce of, or any facilities of a national, state or securities exchange of, any Restricted Jurisdiction and the Offer may not be capable of acceptance by any such use, means, instrumentality or otherwise.

The New CareTech Shares have not been and will not be registered under the US Securities Act or under the securities laws of any state or other jurisdiction of the United States and may not be offered or sold in the United States absent registration or an exemption from registration under the US Securities Act.

Unless otherwise determined by CareTech or required by the Takeover Code, and permitted by applicable law and regulation, the Transaction will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Transaction by any such use, means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction.

The availability of the Transaction and the New CareTech Shares under the Transaction to Cambian Shareholders who are not resident in the United Kingdom, and the availability of the Full Cash Alternative to such shareholders, may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable legal or regulatory requirements.

Further details in relation to the treatment of Overseas Shareholders for the purpose of the Transaction will be contained in the Scheme Document.

Information relating to Cambian Shareholders

Please be aware that addresses, electronic addresses and certain other information provided by Cambian Shareholders, persons with information rights and other relevant persons for the receipt of communications from Cambian may be provided to CareTech during the Offer Period as required under Section 4 of Appendix 4 of the Takeover Code.

Publication on website and hard copies

A copy of this Announcement and the documents required to be published by Rule 26 of the Takeover Code will be available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on CareTech's website at www.caretech-uk.com and Cambian's website at www.cambiangroup.com by no later than 12 noon on 17 August 2018. For the avoidance of doubt, the content of those websites is not incorporated into and do not form part of this Announcement.

Cambian Shareholders and CareTech Shareholders may request a hard copy of this Announcement by contacting +44 (0) 371 384 2030 (non-UK callers +44 (0) 121 415 7047) (for Cambian Shareholders) or +44 (0)871 664 0300 (non-UK callers +44 (0) 371 664 0300) (for CareTech Shareholders) during business hours or by submitting a request in writing to Equiniti at Cambian Group plc Registrar, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA (for Cambian Shareholders) or Link at Link Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU (for CareTech Shareholders). If you have received this Announcement in electronic form, copies of this Announcement will not be provided unless such a request is made.

If you are in any doubt about the contents of this Announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or independent financial adviser, duly authorised under FSMA if you are resident in the United Kingdom, or from another appropriately authorised independent financial adviser.

Rounding

Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

appendix 1

CONDITIONS AND FURTHER TERMS OF THE TRANSACTION

The Transaction will comply with the applicable rules and regulations of the FCA, the London Stock Exchange and the Takeover Code, will be governed by English law and will be subject to the exclusive jurisdiction of the English courts. In addition it will be subject to the terms and conditions set out in the Scheme Document and related Forms of Proxy and Form of Election.

1. Conditions of the Scheme and the Transaction

(a) Statutory Conditions

(i) The Scheme will be subject to the following Conditions:

(A) (i) the approval by a majority in number representing not less than 75 per cent. in value of Cambian Shareholders (or the relevant class or classes thereof, if applicable) who are on the register of members of Cambian at the Voting Record Time, present and voting, either in person or by proxy, at the Court Meeting and at any separate class meeting which may be required (or any adjournment thereof); and (ii) such Court Meeting being held on or before the 22nd day after the expected date of the Court Meeting to be set out in the Scheme Document in due course (or such later date as may be agreed between CareTech and Cambian in writing and the Court may allow);

(B) (i) all resolutions required to implement the Scheme and to approve certain related matters being duly passed at the Cambian General Meeting (or any adjournment thereof); and (ii) the Cambian General Meeting (or any adjournment thereof) being held on or before the 22nd day after the expected date of the Cambian General Meeting to be set out in the Scheme Document in due course (or such later date as may be agreed between CareTech and Cambian in writing and the Court may allow);

(C) (i) the sanction of the Scheme by the Court (with or without modification (but subject to such modification being acceptable to CareTech and Cambian)) and the delivery of the office copy of the Court Order for registration to the Registrar of Companies; and (ii) the Court Hearing being held on or before the 22nd day after the expected date of the Court Hearing to be set out in the Scheme Document in due course (or such later date as may be agreed between CareTech and Cambian in writing and the Court may allow); and

(D) the Scheme becoming unconditional and Effective, by no later than 11.59 p.m. on the Long Stop Date or such later date (if any) as CareTech and Cambian may agree in writing and the Panel and the Court may allow (if such consent and/or approval is required).

If any Condition referred to in paragraphs 1(a)(i)(A) to (D) above is not capable of being satisfied by the date specified therein, CareTech shall make an announcement through a Regulatory Information Service as soon as practicable and, in any event, by not later than 7.00 a.m. on the Business Day following the date so specified, stating whether CareTech has invoked that Condition, (where applicable) waived that Condition or, with the agreement of Cambian, specified a new date by which that Condition must be satisfied. CareTech will not be permitted to invoke the timing element of any Condition referred to in paragraphs 1(a)(i)(A) to (C), where non-satisfaction of that Condition is caused by any act or failure to act by CareTech (other than a refusal by CareTech to agree to an extension).

(b) CareTech Shareholder authorities

The Transaction will be conditional upon the passing at the CareTech General Meeting (or any adjournment thereof) of the CareTech Resolutions required to:

(i) approve, effect and implement the Transaction;

(ii) confer authorities for the issue and allotment of the New CareTech Shares to be issued in connection with the Transaction; and

(iii) disapply all relevant pre-emption rights in respect of the allotment of the New CareTech Shares to be issued in connection with the Transaction,

(as such resolutions will be set out in the CareTech Prospectus).

2. General conditions

Cambian and CareTech have agreed that, subject to the provisions of paragraph 3 below and the requirements of the Panel in accordance with the Takeover Code, the Scheme will also be conditional upon the satisfaction or, where relevant, waiver of the following Conditions:

(a) Admission of Enlarged Share Capital

The London Stock Exchange agreeing to admit or re-admit (as applicable) the CareTech Shares in issue upon the Scheme becoming Effective (including the New CareTech Shares) to trading on AIM subject only to the Scheme becoming Effective and/or, in the case of the New CareTech Shares, to the allotment of such shares;

(b) Other Third Party clearances

(i) Any relevant material change of control consents, notifications or approvals as are required having been received or given (as appropriate) prior to Completion according to the law of any other jurisdiction, other than any consent, notification or approval from the CMA;

(ii) a Third Party not having cancelled or varied, and not having notified any member of the Cambian Group of any proposal to cancel or vary, any permission held by any authorised person within the Cambian Group which is required to carry on the business of the Wider Cambian Group as carried out at the date of this Announcement and which is material to the Cambian Group taken as a whole;

(iii) no Third Party having given notice of a decision to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference, or having enacted, made or proposed any statute, regulation, decision, order or change to published practice and there not continuing to be outstanding any statute, regulation, decision or order which would or might reasonably be expected to (in each case, without prejudice to CareTech's obligations under the Co-operation Agreement):

(A) make the Transaction, its implementation or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, any member of the Wider Cambian Group by any member of the Wider CareTech Group void, illegal and/or unenforceable under the laws of any relevant jurisdiction;

(B) impose any material limitation on, or result in a material delay in, the ability of any member of the Wider CareTech Group directly or indirectly to acquire or hold or to exercise effectively all or any rights of ownership in respect of shares or other securities in Cambian (or any member of the Wider Cambian Group) or on the ability of any member of the Wider Cambian Group or any member of the Wider CareTech Group directly or indirectly to hold or exercise effectively any rights of ownership in respect of shares or other securities (or the equivalent) in any member of the Wider Cambian Group;

(C) require, prevent or materially delay a divestiture or materially alter the terms envisaged for any proposed divestiture by any member of the Wider CareTech Group of any shares or other securities (or the equivalent) in any member of the Wider Cambian Group;

(D) result in any member of the Wider Cambian Group ceasing to be able to carry on business under any name under which it presently carries on business; or

(E) otherwise materially adversely affect any or all of the business, assets, value profits, prospects, operational performance, financial or trading position of any member of the Wider Cambian Group or any member of the Wider CareTech Group in each case in a manner which is adverse to and material in the context of the Wider Cambian Group taken as a whole,

and all applicable waiting and other time periods (including any extensions thereof) during which any such Third Party could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or take any other step under the laws of any jurisdiction in respect of the Transaction or proposed acquisition of any Cambian Shares or otherwise intervene having expired, lapsed, or been terminated;

(iv) all material notifications, filings or applications which are deemed by CareTech (acting reasonably) to be necessary having been made in connection with the Transaction and all necessary waiting and other time periods (including any extensions thereof) under any applicable legislation or regulation of any jurisdiction having expired, lapsed or been terminated (as appropriate) and all statutory and regulatory obligations in any jurisdiction having been complied with in all material respects, in each case, in respect of the Scheme and the Transaction, and all Authorisations which are deemed by CareTech (acting reasonably) to be necessary in any jurisdiction for or in respect of the Scheme or the Transaction or the proposed acquisition of any shares or other securities in, or control of, Cambian by any member of the Wider CareTech Group having been obtained in terms and in a form satisfactory to CareTech (acting reasonably) from all appropriate Third Parties and all such Authorisations which are deemed by CareTech (acting reasonably) to be necessary or appropriate to carry on the business of any member of the Wider Cambian Group in any jurisdiction having been obtained, in each case where the direct consequence of a failure to make such notification or filing or to wait for the expiry, lapse or termination of any such waiting or other time period or to comply with such obligation or obtain such Authorisation would be unlawful in any relevant jurisdiction or have a material adverse effect on the Wider Cambian Group and all such Authorisations remaining in full force and effect at the time at which the Scheme becomes Effective and there being no notice of an intention to revoke, suspend, restrict, modify or not to renew such Authorisations;

(v) no temporary restraining order, preliminary or permanent injunction, preliminary or permanent enjoinment, or other order issued and being in effect by a court or other Third Party which has the effect of making the Transaction or any acquisition or proposed acquisition of any shares or other securities or control or management of, any member of the Wider Cambian Group by any member of the Wider CareTech Group void, voidable, illegal and/or enforceable under the laws of any relevant jurisdiction, or otherwise directly or indirectly prohibiting, preventing, restraining, restricting, delaying or otherwise interfering with the consummation or the approval of the Transaction or the proposed acquisition of any shares or other securities in, or control or management of, any member of the Wider Cambian Group by any member of the Wider CareTech Group;

(c) Confirmation of absence of adverse circumstances

Except as Disclosed, there being no provision of any arrangement, agreement, licence, permit, franchise, lease or other instrument to which any member of the Wider Cambian Group is a party or by or to which any such member or any of its assets is or may be bound, entitled or be subject which, as a consequence of the Transaction or the proposed acquisition by any member of the Wider CareTech Group of any shares or other securities in Cambian or because of a change in the control or management of any member of the Wider Cambian Group or otherwise, would or might reasonably be expected to result in, in each case to an extent which is material in the context of the Cambian Group taken as a whole:

(i) the rights, liabilities, obligations, interests or business of any member of the Wider Cambian Group under any such arrangement, agreement, licence, permit, lease or instrument or the interests or business of any member of the Wider Cambian Group in or with any other firm or company or body or person (or any agreement or arrangement relating to any such business or interests) being or likely to become terminated or adversely modified or affected or any onerous obligation or liability arising or any adverse action being taken or arising thereunder;

(ii) any member of the Wider Cambian Group ceasing to be able to carry on business under any name under which it presently carries on business;

(iii) any assets or interests of, or any asset the use of which is enjoyed by, any member of the Wider Cambian Group being or falling to be disposed of or charged or any right arising under which any such asset or interest could be required to be disposed of or charged or could cease to be available to such member;

(iv) the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any member of the Wider Cambian Group or any such mortgage, charge or other security interest (whenever created, arising or having arisen), becoming enforceable;

(v) the business, assets, value, financial or trading position, profits, prospects or operational performance of any member of the Wider Cambian Group being prejudiced or adversely affected;

(vi) the creation or acceleration of any liability (actual or contingent) by any member of the Wider Cambian Group other than trade creditors or other liabilities incurred in the ordinary course of business;

(vii) any requirement on any member of the Wider Cambian Group to acquire, subscribe, pay up or repay any shares or other securities (other than as contemplated by the terms of the Transaction or the Scheme); or

(viii) any liability of any member of the Wider Cambian Group to make any severance, termination, bonus or other payment to any of its directors or other officers;

(d) No material transactions, claims or changes in the conduct of the business of the Cambian Group

Except as Disclosed, no member of the Wider Cambian Group having since 31 December 2017:

(i) save as between Cambian and its wholly owned subsidiaries or between such wholly owned subsidiaries and save for the issue or transfer out of treasury of Cambian Shares on the exercise of options or vesting of awards granted before the date of this Announcement in the ordinary course, issued or agreed to issue or authorised or proposed or announced its intention to authorise or propose the issue of additional shares of any class, or securities or securities convertible into, or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares or convertible securities;

(ii) recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution (whether payable in cash or otherwise) other than to Cambian or one of its wholly owned subsidiaries;

(iii) other than pursuant to the Transaction and save as between Cambian and its wholly owned subsidiaries or between such wholly owned subsidiaries, merged with (by statutory merger or otherwise) or demerged from or acquired any body corporate, partnership or business or acquired or disposed of, or, other than in the ordinary course of business, transferred, mortgaged or charged or created any security interest over, any assets or any right, title or interest in any asset (including shares and trade investments) or authorised, proposed or announced any intention to do so;

(iv) save as between Cambian and its wholly owned subsidiaries or between such wholly owned subsidiaries, made, authorised, proposed or announced an intention to propose any change in its loan capital which is material in the context of the Cambian Group taken as a whole;

(v) save in the ordinary course of business and save as between Cambian and its wholly owned subsidiaries or between such wholly owned subsidiaries incurred or increased any indebtedness or become subject to any contingent liability to an extent which is material in the context of the Cambian Group or in the context of the Transaction;

(vi) entered into, varied, authorised or proposed entry into or variation of, or announced its intention to enter into or vary, any contract, transaction, arrangement or commitment (whether in respect of capital expenditure or otherwise) (otherwise than in the ordinary course of business) which is of a long term, unusual or onerous nature, or which involves, or could reasonably be expected to involve, an obligation of a nature or magnitude which is, in any such case, material in the context of the Cambian Group taken as a whole or in the context of the Transaction, or which is or is reasonably likely to be restrictive on the business of any member of the Wider Cambian Group to an extent which is or is likely to be material to the Cambian Group taken as a whole or in the context of the Transaction;

(vii) entered into, varied, authorised or proposed entry into or variation of, or announced its intention to enter into or vary the terms of or made any offer (which remains open for acceptance) to enter into or vary the terms of, any contract, commitment, arrangement or any service agreement with any director or senior executive of the Wider Cambian Group save for salary increases, bonuses or variations of terms in the ordinary course;

(viii) proposed, agreed to provide or modified in any material respect the terms of any share plan, incentive scheme, or other benefit relating to the employment or termination of employment of any employee of the Wider Cambian Group which, taken as a whole, are material in the context of the Cambian Group taken as a whole other than in accordance with the terms of the Transaction;

(ix) made or agreed or consented to any material change to:

(A) the terms of the trust deeds constituting the pension scheme(s) established by any member of the Wider Cambian Group for its directors, employees or their dependents (a "Relevant Pension Plan");

(B) the contributions payable to any such Relevant Pension Plan or to any benefits which accrue or to the pensions which are payable thereunder;

(C) the basis on which qualification for, or accrual or entitlement to, such benefits or pensions are calculated or determined; or

(D) the basis upon which the liabilities (including pensions) of such Relevant Pension Plans are funded, valued or made, in each case, to the extent which is material in the context of the Cambian Group taken as a whole;

(x) entered into, implemented or effected, or authorised, proposed or announced its intention to implement or effect, any joint venture, asset or profit sharing arrangement, partnership, composition, assignment, reconstruction, amalgamation, commitment, scheme or other transaction or arrangement (other than the Scheme) otherwise than in the ordinary course of business which is material in the context of the Cambian Group taken as a whole or in the context of the Transaction;

(xi) purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, save in respect of the matters mentioned in sub-paragraph (i) above, made any other change to any part of its share capital;

(xii) waived, compromised or settled any claim otherwise than in the ordinary course of business which is material in the context of the Cambian Group taken as a whole or in the context of the Transaction;

(xiii) save as pursuant to the Cambian Resolutions or as disclosed on publicly available registers, made any alteration to its articles of association or other constitutional documents;

(xiv) (other than in respect of a member which is dormant and was solvent at the relevant time) taken or proposed any steps, corporate action or had any legal proceedings instituted or threatened against it in relation to the suspension of payments, a moratorium of any indebtedness, its winding up (voluntary or otherwise), dissolution, reorganisation or for the appointment of any administrator, receiver, manager, administrative receiver, trustee or similar officer of all or any of its assets or revenues or any analogous proceedings in any jurisdiction or appointed any analogous person in any jurisdiction or had any such person appointed;

(xv) been unable, or admitted in writing that it is unable, to pay its debts or commenced negotiations with one or more of its creditors with a view to rescheduling or restructuring any of its indebtedness, or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business;

(xvi) entered into any contract, commitment, agreement or arrangement otherwise than in the ordinary course of business or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced an intention to, or to propose to, effect any of the transactions, matters or events referred to in this Condition which is material in the context of the Cambian Group taken as a whole;

(xvii) terminated or varied the terms of any agreement or arrangement between any member of the Wider Cambian Group and any other person in a manner which would or might be expected to have a material adverse effect on the financial position of the Cambian Group taken as a whole; or

(xviii) having taken (or agreed or proposed to take) any action which requires, or would require, the consent of the Panel or the approval of Cambian Shareholders in general meeting in accordance with, or as contemplated by, Rule 21.1 of the Takeover Code;

(e) No material adverse change, litigation, regulatory enquiry or similar

Except as Disclosed, since, in the case of Cambian, 31 December 2017 or, in the case of CareTech, 30 September 2017:

(i) there having been no adverse change and no circumstance having arisen which would be expected to result in any adverse change or deterioration in the business, assets, value, financial or trading position, profits, prospects or operational performance of any member of the Wider Cambian Group or the Wider CareTech Group to an extent which is material to the Cambian Group or the CareTech Group taken as a whole or in the context of the Transaction;

(ii) no litigation, arbitration proceedings, prosecution or other legal proceedings having been threatened, announced or instituted by or against or remaining outstanding against any member of the Wider Cambian Group or the Wider CareTech Group or to which any member of the Wider Cambian Group or the Wider CareTech Group is or may become a party (whether as claimant or defendant or otherwise) and no enquiry, review, investigation or enforcement proceedings by, or complaint or reference to, any Third Party against or in respect of any member of the Wider Cambian Group or the Wider CareTech Group having been threatened, announced or instituted by or against, or remaining outstanding in respect of, any member of the Wider Cambian Group or the Wider CareTech Group which, in any such case, might reasonably be expected to have a material adverse effect on the Cambian Group or the CareTech Group taken as a whole or in the context of the Transaction;

(iii) no contingent or other liability having arisen, increased or become apparent which might be likely adversely to affect the business, assets, financial or trading position, profits, prospects or operational performance of any member of the Wider Cambian Group or the Wider CareTech Group to an extent which is material to the Cambian Group or the CareTech Group taken as a whole or in the context of the Transaction; and

(iv) no steps having been taken and no omissions having been made which are likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Wider Cambian Group or the Wider CareTech Group, which is necessary for the proper carrying on of its business and the withdrawal, cancellation, termination or modification of which is material and likely to have a material adverse effect on the Cambian Group or the CareTech Group taken as a whole or in the context of the Transaction;

(f) No discovery of certain matters regarding information and liabilities

Except as Disclosed, since 31 December 2017, Cambian not having discovered or since 30 September 2017, CareTech not having discovered:

(i) that any financial, business or other information concerning the Wider Cambian Group or the Wider CareTech Group publicly announced or disclosed to the other at any time by or on behalf of any member of the Wider Cambian Group or the Wider CareTech Group (as applicable) is misleading, contains a material misrepresentation of fact or omits to state a fact necessary to make that information not misleading and which is, in any case, material in the context of the Cambian Group or the CareTech Group taken as a whole or in the context of the Transaction;

(ii) that any member of the Wider Cambian Group or the Wider CareTech Group is subject to any liability (actual or contingent) and which is material in the context of the Wider Cambian Group or the Wider CareTech Group or in the context of the Transaction;

(iii) that any past or present member of the Wider Cambian Group or the Wider CareTech Group has not complied in any material respect with all applicable legislation, regulations or other requirements of any jurisdiction, or any Authorisations, relating to the use, treatment, storage, carriage, disposal, discharge, spillage, release, leak or emission of any waste or hazardous substance or any substance likely to impair the environment (including property) or harm human health or otherwise relating to environmental matters or the health and safety of humans, which noncompliance would be likely to give rise to any liability including any penalty for noncompliance (whether actual or contingent) on the part of any member of the Wider Cambian Group or the Wider CareTech Group which in any such case is material in the context of the Cambian Group or the CareTech Group in the context of the Transaction; or

(iv) there is, or is likely to be, for that or any other reason whatsoever, any material liability (actual or contingent) of any past or present member of the Wider Cambian Group or the Wider CareTech Group to make good, repair, reinstate or clean up any property now or previously owned, occupied, operated or made use of or controlled by any such past or present member of the Wider Cambian Group or the Wider CareTech Group, under any environmental legislation, regulation, notice, circular order of any government, governmental, quasi-governmental, state or local government, supranational, statutory or other regulatory body, agency, court association or any other person or body in any jurisdiction which in any such case is material in the context of the Cambian Group or the CareTech Group in the context of the Transaction; and

(g) Anti-corruption, sanctions and criminal property

Except as Disclosed, neither CareTech nor Cambian having discovered that:

(i) any past or present member, director, officer or employee of the Wider Cambian Group or the Wider CareTech Group or any person that performs or has performed services for or on behalf of any such company is or has at any time engaged in any activity, practice or conduct (or omitted to take any action) in contravention of the UK Bribery Act 2010, the US Foreign Corrupt Practices Act of 1977, as amended or any other applicable anti-corruption legislation; or

(ii) any past or present member, director, officer or employee of the Wider Cambian Group or the Wider CareTech Group or any person that performs or has performed services for or on behalf of any such company has engaged in any activity or business with, or made any investments in, or made any funds or assets available to, or received any funds or assets from, any government, entity or individual covered by any of the economic sanctions administered by the United Nations or the European Union (or any of their respective member states) or the United States Office of Foreign Assets Control.

Further terms of the Transaction

Waiver and invocation of Conditions

3. Subject to the requirements of the Panel in accordance with the Takeover Code:

(a) CareTech reserves the right to waive, in whole or in part, all or any of the above Conditions, except Conditions 1(a), 1(b) and 2(a) (which cannot be waived in whole) and Conditions 2(e) to 2(g) (inclusive) so far as they relate to CareTech, the Wider CareTech Group, or any part thereof; and

(b) Cambian reserves the right to waive, in whole or in part Conditions 2(e) to 2(g) (inclusive), so far as they relate to CareTech, the Wider CareTech Group, or any part thereof.

Conditions 2(b) to 2(g) (inclusive) must each be fulfilled, determined by CareTech or Cambian (as the case may be) to be or to remain satisfied or (if capable of waiver) be waived by CareTech or Cambian (as the case may be) by no later than a time which is immediately before the commencement of the Court Hearing (or such later time and/or date as the Court may allow), failing which the Transaction will lapse. 

Cambian shall not be under any obligation to waive (if capable of waiver), to determine to be or remain satisfied or to treat as fulfilled any of the Conditions 2(e) to 2(g) (inclusive) so far as they relate to Cambian by a date earlier than the latest date for the fulfilment of that Condition notwithstanding that the other Conditions of the Transaction may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any such Conditions may not be capable of fulfilment.

4. The Transaction will lapse if the Scheme does not become Effective by 11.59 p.m. on the Long Stop Date (or such later date as CareTech and Cambian may agree and the Panel and the Court may allow).

5. If CareTech is required by the Panel to make an offer for Cambian Shares under the provisions of Rule 9 of the Takeover Code, CareTech may make such alterations to any of the above Conditions as are necessary to comply with the provisions of that Rule.

6. Under Rule 13.5(a) of the Takeover Code, CareTech may not invoke a Condition so as to cause the Transaction not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the Condition are of material significance to CareTech in the context of the Transaction. Conditions 1(a), 1(b) and 2(a), and/or any Takeover Offer acceptance conditions adopted on the basis specified in paragraph 10 are not subject to this provision of the Takeover Code.

7. The Transaction will lapse if there is a Phase 2 CMA Reference before the later of the start of the Court Meeting and the start of the Cambian General Meeting. In such event, Cambian will not be bound by the terms of the Scheme.

8. The Transaction will be subject, inter alia, to the Conditions and certain further terms which are set out in this Appendix 1 and those terms which will be set out in the Scheme Document and such further terms as may be required to comply with the provisions of the Takeover Code.

9. Each of the Conditions shall be regarded as a separate Condition and shall not be limited by reference to any other Condition.

Implementation by way of a Takeover Offer

10. CareTech reserves the right to elect, with the consent of the Panel and, in accordance with the Co-operation Agreement, to implement the acquisition of the Cambian Shares by way of a Takeover Offer as an alternative to the Scheme.

In such event, the acquisition will be implemented by CareTech and/or one or more wholly-owned subsidiaries of CareTech on substantially the same terms as those which would apply to the Scheme (subject to such amendments as are appropriate for an acquisition being made by way of takeover offer under Part 28 of the Companies Act, including, if the Panel so agrees, an acceptance condition set at up to 90 per cent. of the shares to which such Takeover Offer relates (or at such other lower percentage as CareTech may, with the agreement of Cambian and subject to the rules of the Takeover Code and with the consent of the Panel may, decide), provided that if it became or was declared unconditional in all respects, the Takeover Offer would result in CareTech holding Cambian Shares carrying greater than 50 per cent. of the voting rights in Cambian).

11.

appendix 2

SOURCES AND BASES OF INFORMATION

Unless otherwise stated in this Announcement:

1. the 90 trading day Volume Weighted Average Prices of a Cambian Share as of 9 July 2018 are derived from data provided by Factset and refer to trading on the London Stock Exchange only;

2. the value attributed to the fully diluted issued share capital of Cambian is based on 184,198,746 Cambian Shares in issue, together with 1,937,024 unissued Cambian Shares which are subject to options under the Cambian Share Plans, in each case as at the Last Practicable Date;

3. references to the existing issued share capital of Cambian are to 184,198,746 Cambian Shares in issue as at close of business on the Last Practicable Date. The international securities identification number for the Cambian Shares is GB00BKXNB024;

4. the market capitalisation for CareTech is based on the existing issued share capital of CareTech and the Closing Price of 374.5 pence per CareTech Share on the Last Practicable Date;

5. references to the existing issued share capital of CareTech are to 75,691,423 CareTech Shares in issue as at close of business on the Last Practicable Date. The international securities identification number for the CareTech Shares is GB00B0KWHQ09;

6. the financial information relating to CareTech is extracted (without adjustment) from the audited consolidated financial statements of CareTech for the year ended 30 September 2017 and the consolidated financial statements of CareTech for the six-month period to 31 March 2018;

7. the financial information relating to Cambian is extracted (without adjustment) from the audited consolidated financial statements of Cambian for the year ended 31 December 2017;

8. the enterprise value for Cambian incorporates the value attributed to the fully diluted issued share capital of Cambian under the Headline Offer or the Full Cash Alternative, adjusted for the net cash reported by Cambian as at 31 December 2017 of £82.8 million;

9. the valuation multiple to Cambian's EBITDA incorporates: (i) the value attributed to the fully diluted issued share capital of Cambian under the Full Cash Alternative, adjusted for the net cash reported by Cambian as at 31 December 2017 of £82.8 million and (ii) adjusted EBITDA reported by Cambian for the year ended 31 December 2017 of £18.7 million; and

10. all prices for Cambian and CareTech Shares have been derived from Factset and represent Closing Prices on the relevant date(s).

appendix 3

DETAILS OF IRREVOCABLE UNDERTAKINGS

PART A - IN RESPECT OF THE SCHEME AND THE CAMBIAN RESOLUTIONS

1. Cambian Directors' Irrevocable Undertakings

The following Cambian Directors have given irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the Cambian Resolutions to be proposed at the Cambian General Meeting (or, in the event that the Transaction is implemented by way of a Takeover Offer, to accept, or procure the acceptance of, the Takeover Offer) in relation to the following Cambian Shares, in which they or their family members and connected persons are beneficially interested, representing, in aggregate, approximately 1.2 per cent. of the Cambian Shares at the Last Practicable Date:

These irrevocable undertakings will cease to be binding if:

(a) the Scheme or the Takeover Offer lapses or is withdrawn in accordance with its terms and CareTech publicly confirms that it does not intend to proceed with the Transaction (either by way of Scheme or Takeover Offer); or

(b) the CareTech Directors revoke their recommendation of the Transaction.

2. Other Cambian Shareholders

The following Cambian Shareholders have given irrevocable undertakings to:

(a) vote (or procure the voting) in favour of the Scheme at the Court Meeting and the Cambian Resolutions to be proposed at the Cambian General Meeting (or, in the event that the Transaction is implemented by way of a Takeover Offer, to accept, or procure the acceptance of, the Takeover Offer); and

(b) make no election (or procure that no election is made) under the Full Cash Alternative in respect of any of their Cambian Shares and, accordingly, receive New CareTech Shares and cash consideration in accordance with the Headline Offer,

in relation to the following Cambian Shares, in which they or their family members and connected persons are beneficially interested, representing, in aggregate, approximately 56.8 per cent. of the Cambian Shares at the Last Practicable Date:

The irrevocable undertakings given by Forest Nominees, Huntress Nominees and LOAME will cease to be binding if:

(a) the Scheme does not become Effective or, if CareTech elects to implement the Transaction by way of a Takeover Offer, the Takeover Offer does not become or is not declared unconditional as to acceptances, in each case by 6.00 p.m. on the Long Stop Date;

(b) the Takeover Offer or the Scheme lapses or is withdrawn and no new, revised or replacement Scheme or Takeover Offer has been announced, in accordance with Rule 2.7 of the Takeover Code, in its place or is announced, in accordance with Rule 2.7 of the Takeover Code, at the same time;

(c) in accordance with the Takeover Code, a third party makes a general offer (howsoever structured) to acquire the whole of the issued and to be issued share capital of Cambian for a purchase price of more than 5 per cent. above the Headline Offer per Cambian Share as calculated by reference to the volume weighted average share price per CareTech Share for the 10 Business Days prior to such offer;

(d) (in relation to Forest Nominees and Huntress Nominees only) in accordance with the Takeover Code, a third party makes a general offer (howsoever structured) to acquire the whole of the issued and to be issued share capital of Cambian and the volume weighted average share price per CareTech Share for the 30 Business Days prior to the date of such third party offer (as reported on Bloomberg) is less than 373 pence per share;

(e) (in relation to LOAME only) on any day prior to the Scheme becoming Effective, the volume weighted average share price per CareTech Share for the 30 Business Days immediately prior to that day is less than 373 pence per CareTech share; or

(f) the Scheme becomes Effective or, if CareTech elects to implement the Transaction by way of a Takeover Offer, the Takeover Offer becomes or is declared wholly unconditional.

The irrevocable undertakings given by Teleios Capital Partners LLC, Westminster Holdings Limited and Stichting Value Partners Family Office will cease to be binding if:

(a) the Scheme does not become Effective or, if CareTech elects to implement the Transaction by way of a Takeover Offer, the Takeover Offer does not become or is not declared unconditional as to acceptances, in each case by 6.00 p.m. on the Long Stop Date;

(b) the Takeover Offer or Scheme lapses or is withdrawn and no new, revised or replacement Scheme or Takeover Offer has been announced, in accordance with Rule 2.7 of the Takeover Code, in its place or is announced, in accordance with Rule 2.7 of the Takeover Code, at the same time; or

(c) the Scheme becomes Effective or, if CareTech elects to implement the Transaction by way of a Takeover Offer, the Takeover Offer becomes or is declared wholly unconditional.

The following Cambian Shareholders have given irrevocable undertakings to, subject to any other offer for their Cambian Shares being made at a price per Cambian Share above 193 pence:

(a) vote (or procure the voting) in favour of the Scheme at the Court Meeting and the Cambian Resolutions to be proposed at the Cambian General Meeting (or, in the event that the Transaction is implemented by way of a Takeover Offer, to accept, or procure the acceptance of, the Takeover Offer); and

(b) elect for the Full Cash Alternative and, accordingly, receive all cash consideration instead of the cash and the New CareTech Shares to which they would have been entitled under the Headline Offer,

in relation to the following Cambian Shares, in which they or their family members and connected persons are beneficially interested, representing in aggregate, approximately 22.2 per cent. of the Cambian Shares at the Last Practicable Date:

These irrevocable undertakings will cease to be binding if:

(a) the relevant Cambian Shareholder opts to accept another offer for its Cambian Shares at a price per Cambian Share above 193 pence;

(b) if the Scheme or the Takeover Offer (as applicable) lapses or is withdrawn, as the case may be;

(c) if applicable, the Scheme does not become Effective by 6.00 p.m. on the Long Stop Date or, if earlier, the long stop date agreed between CareTech and the Cambian and specified in the Scheme Document by which the Scheme is to become Effective or be withdrawn; or

(d) if applicable, the Scheme is withdrawn.

3. Other

Richard Griffiths has given an irrevocable undertaking instructing the registered holder of 6,922,962 Cambian Shares to make no election (or procure that no election is made) under the Full Cash Alternative in respect of any of his Cambian Shares and, accordingly, will receive New CareTech Shares and cash consideration in accordance with the Headline Offer, in relation to the following Cambian Shares representing, in aggregate, approximately 3.8 per cent. of the Cambian Shares at the Last Practicable Date:

This irrevocable undertaking will cease to be binding if:

(a) the Scheme does not become Effective or, if CareTech elects to implement the Transaction by way of a Takeover Offer, the Takeover Offer does not become or is not declared unconditional as to acceptances, in each case by 6.00 p.m. on the Long Stop Date;

(b) the Takeover Offer or Scheme lapses or is withdrawn and no new, revised or replacement Scheme or Takeover Offer has been announced, in accordance with Rule 2.7 of the Takeover Code, in its place or is announced, in accordance with Rule 2.7 of the Takeover Code, at the same time;

(c) in accordance with the Takeover Code, a third party makes a general offer (howsoever structured) to acquire the whole of the issued and to be issued share capital of Cambian for a purchase price of more than 5 per cent. above the Headline Offer per Cambian Share as calculated by reference to volume weighted average share price per CareTech Share for the 10 Business Days prior to such offer; or

(d) in accordance with the Takeover Code, a third party makes a general offer (howsoever structured) to acquire the whole of the issued and to be issued share capital of Cambian and the volume weighted average share price for CareTech for the 30 business days prior to the date of such third party offer (as reported on Bloomberg) is less than 373 pence per CareTech Share.

IRREVOCABLE UNDERTAKINGS

PART B - IN RESPECT OF THE CARETECH RESOLUTIONS

1. CareTech Directors' Irrevocable Undertakings

The following CareTech Directors have given irrevocable undertakings to vote (or procure the voting) in favour of the CareTech Resolutions to be proposed at the CareTech General Meeting in relation to the following CareTech Shares, in which they or their family members and connected persons are beneficially interested, representing, in aggregate, approximately 14.9 per cent. of the CareTech Shares at the Last Practicable Date:

Each of the irrevocable undertakings, other than the Westminster Holdings Limited undertaking, will cease to be binding if:

(a) the Cambian Directors revoke their recommendation of the Transaction;

(b) the Scheme does not become Effective (or, if applicable, the Takeover Offer does not become or is not declared unconditional in all respects) by 6.00 p.m. on the Long Stop Date (or such later time or date as agreed between CareTech and Cambian, with the approval of the Court and/or the Panel (if required)); or

(c) the Scheme or the Takeover Offer lapses or is withdrawn in accordance with its terms and CareTech publicly confirms that it does not intend to proceed with the Transaction (either by way of Scheme or Takeover Offer).

The Westminster Holdings Limited irrevocable undertaking, will cease to be binding if:

(a) the CareTech Directors revoke their recommendation of the Transaction;

(b) the Scheme does not become Effective (or, if applicable, the Takeover Offer does not become or is not declared unconditional in all respects) by 6.00 p.m. on the Long Stop Date (or such later time or date as agreed between CareTech and Cambian, with the approval of the Court and/or the Panel (if required)); or

(c) the Scheme or the Takeover Offer lapses or is withdrawn in accordance with its terms and CareTech publicly confirms that it does not intend to proceed with the Transaction (either by way of Scheme or Takeover Offer).

2. CareTech Shareholder Irrevocable Undertaking

The following CareTech Shareholders have given an irrevocable undertaking to vote (or procure the voting) in favour of the CareTech Resolutions to be proposed at the CareTech General Meeting in relation to the following CareTech Shares, in which they or their family members and connected persons are beneficially interested, representing, in aggregate, approximately 27.4 per cent. of the CareTech Shares at the Last Practicable Date:

The Liontrust irrevocable undertaking will cease to be binding if:

(a) the Scheme does not become Effective (or, if applicable, the Takeover Offer does not become or is not declared unconditional in all respects) by 6.00 p.m. on the Long Stop Date (or such later time or date as agreed between CareTech and Cambian, with the approval of the Court and/or the Panel (if required));

(b) the Scheme or the Takeover Offer lapses or is withdraw in accordance with its terms; or

(c) the terms of the Transaction are modified in a manner which is adverse to Liontrust without their prior consent.

The Stichting Value Partners Family Office irrevocable undertaking will cease to be binding if:

(a) the Scheme does not become Effective (or, if applicable, the Takeover Offer does not become or is not declared unconditional in all respects) by 6.00 p.m. on the Long Stop Date (or such later time or date as agreed between CareTech and Cambian, with the approval of the Court and/or the Panel (if required)); or

(b) the Scheme or the Takeover Offer lapses or is withdrawn in accordance with its terms and CareTech publicly confirms that it does not intend to proceed with the Transaction (either by way of Scheme or Takeover Offer).

appendix 4

QUANTIFIED FINANCIAL BENEFITS STATEMENT

The information in this Appendix 4 has been compiled by CareTech.

Part A

CareTech has made the following Quantified Financial Benefit Statement in paragraph 3 of this Announcement.

The CareTech Directors believe the Transaction will allow Cambian Shareholders and CareTech Shareholders to share substantial synergy benefits and have identified recurring pre-tax cost synergies of approximately £6 million per annum.

The synergies identified below reflect both beneficial elements and relevant costs that arise as a result of the Transaction and could not be achieved by the CareTech and Cambian businesses operating independently of each other. A central objective of the integration will, however, be the retention of the brands and capabilities of both CareTech and Cambian.

The Board of CareTech has identified the following potential recurring cost synergies:

· estimated £5.3 million reduction in combined central costs through rationalised head office, IT, board, management and other costs;

· estimated £0.4 million reduction in combined central costs through rationalised support function staff costs; and

· estimated procurement savings of £0.3 million from scale efficiencies.

The Board of CareTech expects to realise the synergies on a phased basis as follows:

· approximately £3 million of pre-tax cost synergies will be realised in the financial year ending 30 September 2019;

· approximately £5 million of pre-tax cost synergies will be realised in the financial year ending 30 September 2020; and

· approximately £6 million of pre-tax cost synergies will be realised in the financial year ending 30 September 2021.

The Board of CareTech expects that the integration process and the realisation of these synergies will result in one-off exceptional costs of approximately £7.6 million. The exceptional costs are expected to occur on a phased basis: approximately £3.0 million in the financial year ending 30 September 2019, approximately £3.1 million in the financial year ending 30 September 2020 and approximately £1.5 million in the financial year ending 30 September 2021. The CareTech Directors do not expect any material dis-synergies to arise in connection with the Transaction.

Reports

The Board of CareTech believes that the Enlarged Group should be able to achieve the synergies set out in the Quantified Financial Benefits Statement. As required by Rule 28.1(a) of the City Code, Grant Thornton, as reporting accountants for CareTech, and Jefferies, as financial adviser to CareTech, have provided letters for the purposes of the Takeover Code. These letters are appended to this Appendix 4.

Bases of calculation

Cost and synergy numbers were calculated based on the budgets for the financial year ending in 2018 and business plans of both CareTech and Cambian and additional information shared to CareTech by Cambian.

Cost saving assumptions were based on a line by line review of duplicate functions and costs and detailed discussions between the respective senior management teams, to derive benefits which may be available from the elimination of duplicate activities and services provided by, or to, the Enlarged Group and from savings available from combined scale economies arising from consolidation of procurement.

Where appropriate, assumptions were used to estimate the costs of implementing the new structures, systems and processes required to realise the synergies.

In addition, the CareTech Directors have assumed that:

· the Transaction will be completed in the fourth quarter of 2018; and

· there will be no significant impact on the underlying operations of either company or their ability to continue to conduct their businesses.

Important notes

1. The statements of estimated cost savings and synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, the cost savings and synergies referred to may not be achieved, or those achieved could be materially different from those estimated. No statement in the Quantified Financial Benefits Statement, or this Announcement generally, should be construed as a profit forecast.

2. Due to the scale of the Enlarged Group, there may be additional changes to the Enlarged Group's operations. As a result, and given the fact that the changes relate to the future, the resulting cost savings may be materially greater or less than those estimated.

3. In arriving at the estimate of synergies set out in this Announcement, the CareTech Directors have assumed that there will be no significant impact on the business of the Enlarged Group.

Part B

Report from Grant Thornton on the Quantified Financial Benefits Statement

Dear Sirs

CareTech Holdings PLC (the Company) and its Subsidiary Undertakings (together the Group) -

Report on the Quantified Financial Benefits Statement

We report on the statement made by the directors of the Company (the Directors) on the quantified financial benefits set out in Part A of Appendix 4 to the announcement (Statement) issued by the Company on 16 August 2018 (Announcement).

The Statement has been made in the context of the disclosures in Part A of Appendix 4 to the Announcement setting out, inter alia, the bases of the belief of the Directors (including sources of information and assumptions) supporting the Statement and their analysis and explanation of the underlying constituent elements.

This report is required by Rule 28.1(a)(i) of the City Code on Takeovers and Mergers (the Code) and is given for the purpose of complying with that rule and for no other purpose.

Responsibility

It is the responsibility of the Directors to prepare the Statement in accordance with the requirements of the Code.

It is our responsibility to form an opinion as required by Rule 28.1(a)(i) of the Code as to whether the Statement has been properly compiled on the basis stated and to report that opinion to you.

Save for any responsibility arising under Rule 28.1(a)(i) of the Code to any person as and to the extent there provided, to the fullest extent permitted by law we do not assume any other responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report, which is required by and given solely for the purposes of complying with, Rule 23.2(b) of the Code, or our statement consenting to its inclusion in the Announcement.

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom, insofar as they are applicable to a report on a quantified financial benefits statement. Our work included considering whether the Statement has been accurately computed based upon the disclosed bases of belief (including the principal assumptions). Whilst the basis of belief (and the principal assumptions) upon which the Statement is based are solely the responsibility of the Directors, we considered whether anything came to our attention to indicate whether any of the bases of belief (or principal assumptions) adopted by the Directors which, in our opinion, are necessary for a proper understanding of the Statement have not been disclosed and whether any bases of belief (or principal assumption) made by the Directors appears to us to be unrealistic. Our work did not involve any independent examination of any of the financial or other information underlying the Statement.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Statement has been properly compiled on the basis stated. We have discussed the Statement together with the bases of belief (including sources of information and assumptions) with the Directors and with Jefferies International Limited.

Since the Statement and the principal assumptions on which it is based relate to the future, the actual synergy benefits may be affected by unforeseen events, the actual benefits achieved are likely to be different from those anticipated in the Statement and differences may be material. Accordingly, we can express no opinion as to the achievability of the synergy benefits identified by the Directors in the Statement.

Our work has not been carried out in accordance with auditing or other standards and practices generally accepted outside the United Kingdom, including the United States of America and accordingly should not be relied upon as if it had been carried out in accordance with those standards and practices.

Opinion

In our opinion, on the basis of the foregoing, the Statement has been properly compiled on the basis stated

Yours faithfully

GRANT THORNTON UK LLP

____________________________________________________________________

Part C

Report from Jefferies on the Quantified Financial Benefits Statement

The Directors

CareTech Holdings PLC

Metropolitan House

3 Darkes Lane

Potters Bar

Hertfordshire

EN6 1AG

16 August 2018

Dear Sirs,

Recommended Offer for Cambian Group Plc (the "Target") by CareTech Holdings PLC ("CareTech")

We refer to the statement of estimated quantified financial benefits, the bases of preparation thereof and the notes thereto (together, the "Statement") made by CareTech and set out in Part A of Appendix 4 of the announcement issued by CareTech on 16 August 2018 (the "Announcement"), for which the directors of CareTech are solely responsible under Rule 28.1 of the City Code on Takeovers and Mergers (the "Code").

We have discussed the Statement (including the assumptions, bases of calculation and sources of information referred to therein), with the directors of CareTech and those officers and employees of CareTech who developed the underlying synergy analysis. The Statement is subject to uncertainty as described in the Announcement and our work did not involve an independent examination of any of the financial or other information underlying the Statement.

We have relied upon the accuracy and completeness of all the financial and other information provided to us by or on behalf of CareTech or otherwise discussed with or reviewed by us and have assumed (without verification) such accuracy and completeness for the purposes of providing this letter. We have also reviewed the work carried out by Grant Thornton LLP and have discussed with them the opinion set out in their letter of 16 August 2018 (and set out in Part B of Appendix 4 of the Announcement) addressed to yourselves and ourselves on this matter.

We do not express any opinion as to the achievability of the quantified financial benefits identified by the directors of CareTech.

This letter is provided solely to the directors of CareTech in connection with Rule 28.1(a)(ii) of the Takeover Code and for no other purpose. We accept no responsibility to CareTech, its shareholders or any other person other than the directors of CareTech in respect of the contents of, or any matter arising out of or in connection with, this letter. No person other than the directors of CareTech can rely on the contents of this letter, and to the fullest extent permitted by law, we exclude all liability (whether in contract, tort or otherwise) to any other person, in respect of this letter, its contents, or the work undertaken in connection with this letter, or any of the results that can be derived from this letter or any written or oral information provided in connection with this letter, and any such liability is expressly disclaimed except to the extent that such liability cannot be excluded by law.

On the basis of the foregoing, we consider that the Statement, for which the directors of CareTech are solely responsible for the purposes of the Code, has been prepared with due care and consideration.

Yours faithfully,

Jefferies International Limited

appendix 5

DEFINITIONS

The following definitions apply throughout this Announcement unless the context otherwise requires:

"Admission" means the admission to trading on AIM of the Enlarged Share Capital upon the Transaction becoming Effective in accordance with Rule 6 of the AIM Rules

"AIM" means the alternative investment market operated by the London Stock Exchange

"AIM Rules" means the rules published by the London Stock Exchange which set out the rules and responsibilities in relation to a company with a class of securities admitted to AIM, as amended from time to time

"Announcement" means this announcement made in accordance with Rule 2.7 of the Takeover Code, including its summary and appendices

"associated undertaking" shall be construed in accordance with paragraph 19 of Schedule 6 to The Large and Medium sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410) but for this purpose ignoring paragraph 19(1)(b) of Schedule 6 to those regulations)

"Authorisations" means any and all authorisations, orders, grants, recognitions, confirmations, consents, licences, clearances, certificates, permissions, exemptions or approvals

"Board" means in relation to CareTech or Cambian, the board of directors of the relevant company as at the date of this Announcement

"Business Day" means a day, not being a public holiday, Saturday or Sunday, on which clearing banks in London are open for normal business

"Cambian" means Cambian Group plc, a company incorporated in England and Wales with company number 08929371

"Cambian Annual Report and Accounts" means the annual report and audited accounts of Cambian for the year ended 31 December 2017

"Cambian Directors" means the Board of Cambian at the date of this Announcement

"Cambian General Meeting" means the general meeting of Cambian Shareholders to be convened in connection with the Transaction, including any adjournment, postponement or reconvention thereof

"Cambian Group" means Cambian and its subsidiary undertakings and where the context permits, each of them

"Cambian Meetings" means the Court Meeting and the Cambian General Meeting

"Cambian Resolutions" means the resolutions to be proposed by Cambian at the Cambian General Meeting to, amongst other things, authorise the Cambian Directors to take certain actions in relation to the Scheme, including the amendment of Cambian's articles of association and the delisting of the Cambian Shares

"Cambian Share Plans" means the Cambian Group 2014 Share Incentive Plans, comprising the 2014 Long-Term Incentive Plan, the IPO Continuation Option Plan No.1 and the IPO Continuation Option Plan No.2

"Cambian Shareholders" means holders of Cambian Shares from time to time

"Cambian Shares" means the ordinary shares of 1 pence each in the share capital of Cambian

"CareTech" means CareTech Holdings PLC, a company incorporated in England and Wales with company number 04457287

"CareTech Annual Report and Accounts" means the annual report and audited accounts of CareTech for the year ended 30 September 2017

"CareTech Directors" means the Board of CareTech at the date of this Announcement

"CareTech General Meeting" means the general meeting of CareTech Shareholders to be convened in connection with the Transaction, including any adjournment, postponement or reconvention thereof

"CareTech Group" means CareTech and its subsidiary undertakings and where the context permits, each of them

"CareTech Prospectus" means the combined prospectus and AIM admission document to be published by CareTech in respect of the Transaction, the New CareTech Shares to be issued in connection with the Transaction, Admission and including, amongst other things, a notice convening the CareTech General Meeting to be sent to CareTech Shareholders and Cambian Shareholders

"CareTech Resolutions" means the resolutions to be proposed by CareTech at the CareTech General Meeting in connection with the Transaction, as further described in paragraph 1(b) of Appendix 1 to this Announcement and set out in the notice convening the CareTech General Meeting in the CareTech Prospectus

"CareTech Shareholders" means holders of CareTech Shares from time to time

"CareTech Shares" means the ordinary shares of 0.5 pence each in the share capital of CareTech

"certificated" or "certificated form" means in relation to a share or other security, a share or other security title to which is recorded in the relevant register of the share or other security as being held in certificated form (that is, not in CREST)

"Clean Team Agreement" means the clean team agreement entered into between CareTech and Cambian dated 10 July 2018

"Closing Price" means the closing middle market price of a Cambian Share or CareTech Share, as applicable, as derived from the Daily Official List on any particular date

"CMA" means the Competition and Markets Authority in the United Kingdom

"Companies Act" means the Companies Act 2006, as amended from time to time

"Completion" means the day on which the Transaction becomes Effective

"Conditions" means the conditions of the Transaction, as set out in Appendix 1 to this Announcement and to be set out in the Scheme Document

"Confidentiality Agreement" means the confidentiality agreement entered into between CareTech and Cambian on 19 April 2018

"Co-operation Agreement" means the co-operation agreement entered into between CareTech and Cambian dated 16 August 2018

"Court" means the High Court of Justice in England and Wales

"Court Hearing" means the hearing of the Court to sanction the Scheme

"Court Meeting" means the meeting(s) of Scheme Shareholders to be convened at the direction of the Court pursuant to Part 26 of the Companies Act, for the purpose of considering and, if thought fit, approving the Scheme (with or without amendment), including any adjournment, postponement or reconvention thereof

"Court Order" means the order of the Court sanctioning the Scheme under Part 26 of the Companies Act

"CREST" means the relevant system (as defined in the Regulations) in respect of which Euroclear is the operator (as defined in the Regulations) in accordance with which securities may be held or transferred in uncertificated form

"Daily Official List" means the daily official list of the London Stock Exchange

"Disclosed" means information which has been fairly disclosed: (i) by, or on behalf of, Cambian to CareTech or CareTech to Cambian (as applicable) in a data room established for the purpose of the Transaction; (ii) in the Cambian Annual Report and Accounts or the CareTech Annual Report and Accounts; (iii) in any announcement to a Regulatory Information Service by, or on behalf of, Cambian or CareTech, prior to the publication of this Announcement; or (iv) in this Announcement

"EBITDA" means earnings before interest, tax, depreciation and amortisation

"Effective" means in the context of the Transaction: (i) if the Transaction is implemented by way of the Scheme, the Scheme having become effective pursuant to its terms; or (ii) if the Transaction is implemented by way of a Takeover Offer, the Takeover Offer having been declared or having become unconditional in all respects in accordance with the requirements of the Takeover Code

"Effective Date" means the date on which the Transaction becomes Effective (being, if the Transaction is implement by way of the Scheme, the date on which the Court Order is filed at the Registrar of Companies)

"Enlarged Group" means the CareTech Group as enlarged by the Cambian Group following Completion

"Enlarged Share Capital" means the CareTech Shares in issue upon the Transaction becoming Effective (including the New CareTech Shares)

"Excluded Shares" means any Cambian Shares beneficially owned by CareTech or any subsidiary undertaking of CareTech immediately prior to the Scheme Record Time

"Existing CareTech Shares" means the CareTech Shares in issue as at the date of this Announcement

"Euroclear" means Euroclear UK & Ireland Limited

"FCA" means the Financial Conduct Authority or its successor from time to time

"FCA Handbook" means the FCA's Handbook of rules and guidance as amended from time to time

"Form of Election" means the form of election in relation to the Full Cash Alternative, which shall accompany the Scheme Document

"Forms of Proxy" means the forms of proxy in connection with each of the Court Meeting and the Cambian General Meeting, which shall accompany the Scheme Document

"FSMA" means the Financial Services and Markets Act 2000 (as amended from time to time)

"Full Cash Alternative" means the alternative whereby eligible Cambian Shareholders may elect, subject to having submitted a valid Form of Election, to receive cash instead of the cash and the New CareTech Shares to which they would otherwise be entitled to receive under the Scheme in accordance with the Headline Offer, as described in, and subject to the terms of paragraph 6 of this Announcement

"GI Shareholders" means Advanced Childcare LLC and Care Aspirations II LLC (each a Cambian Shareholder)

"Grant Thornton" means Grant Thornton UK LLP

"Headline Offer" means the entitlement of Cambian Shareholders under the Scheme to receive 0.267 New CareTech Shares and 100 pence in cash for each Cambian Share held by that Cambian Shareholder, unless such Cambian Shareholder elects to receive the Full Cash Alternative in respect of any or all of their Cambian Shares

"Investec" means Investec Bank plc

"Jefferies" means Jefferies International Limited

"J.P. Morgan Cazenove" means J.P. Morgan Securities plc (which conducts its UK investment banking business as J.P. Morgan Cazenove)

"Last Practicable Date" means 15 August 2018 (being the last practicable date prior the publication of this Announcement)

"Liontrust" means Liontrust Investment Partners LLP (a CareTech Shareholder)

"LOAME" means Lombard Oder Asset Management (Europe) Limited (a Cambian Shareholder)

"London Stock Exchange" means London Stock Exchange plc or its successor

"Long Stop Date" means 31 December 2018 or such later date (if any) as CareTech and Cambian may agree in writing and the Panel and the Court may allow (if such consent and/or approval is required)

"Main Market" means the main market for listed securities of the London Stock Exchange

"New CareTech Shares" means the CareTech Shares proposed to be issued to Cambian Shareholders in connection with the Transaction

"Offer Period" means the offer period (as defined by the Takeover Code) relating to Cambian, which commenced on 10 July 2018

"Offer Price" means, as the context requires, the consideration payable by CareTech for each Cambian Share either under the Headline Offer or the Full Cash Alternative

"Official List" means the Official List of the FCA

"Opening Position Disclosure" means an announcement containing details of interests or short positions in, or rights to subscribe for, any relevant securities of a party to the Transaction if the person concerned has such a position

"Overseas Shareholders" means Cambian Shareholders (or nominees of, or custodians of trustees for, Cambian Shareholders) not resident in, or nationals or citizens of the United Kingdom

"Panel" means the Panel on Takeovers and Mergers

"Panmure Gordon" means Panmure Gordon (UK) Limited

"Phase 2 CMA Reference" means a reference of the Transaction to the chair of the CMA for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013

"Quantified Financial Benefits Statement" means the quantified financial benefits statement set out in paragraph 3 and Part A of Appendix 4 of this Announcement

"Registrar of Companies" means the Registrar of Companies in England and Wales

"Regulations" means the Uncertificated Securities Regulations 2001

"Regulatory Information Service" means a regulatory information service as defined in the FCA Handbook

"relevant securities" shall be construed in accordance with the Takeover Code

"Restricted Jurisdiction" means any jurisdiction where local laws or regulations may result in a significant risk of civil, regulatory or criminal exposure if information concerning the Transaction is sent or made available to Cambian Shareholders in that jurisdiction

"Rothschild" means N.M. Rothschild & Sons Limited

"Scheme" means the proposed scheme of arrangement under Part 26 of the Companies Act between Cambian and the Scheme Shareholders, with or subject to any modification, addition or condition approved or imposed by the Court and agreed by Cambian and CareTech

"Scheme Document" means the document to be sent to Cambian Shareholders, persons with information rights and, for information only to holders of options granted under the Cambian Share Plans containing, amongst other things, the full terms and conditions of the Scheme and notices convening the Cambian Meetings

"Scheme Record Time" means the time and date specified in the Scheme Document as the record time for the Scheme or such later time and/or date as CareTech and Cambian may agree

"Scheme Shareholders" means holders of Scheme Shares

"Scheme Shares" means all Cambian Shares: (i) in issue at the date of the Scheme Document; (ii) (if any) issued after the date of the Scheme Document but on or before the Voting Record Time; and (iii) (if any) issued at or after the Voting Record Time and on or before the Scheme Record Time in respect of which the original or any subsequent holders thereof are, or shall have agreed in writing to be, bound by the Scheme, in each case other than the Excluded Shares

"subsidiary", "subsidiary undertaking" and "undertaking" shall be construed in accordance with the Companies Act

"Takeover Code" means the City Code on Takeovers and Mergers issued by the Panel, as amended from time to time

"Takeover Offer" means, if the Transaction is implemented by way of a takeover offer as defined in Chapter 3 of Part 28 of the Companies Act, the recommended offer to be made by or on behalf of CareTech to acquire the entire issued and to be issued share capital of Cambian and, where the context admits, any subsequent revision, variation, extension or renewal thereof

"Third Party" means each of a central bank, government, government department or governmental, quasi-governmental, supranational, statutory, regulatory, environmental, administrative, fiscal or investigative body, court, trade agency, association, institution, environmental body, employee representative body or any other body or person whatsoever in any relevant jurisdiction, including, for the avoidance of doubt, the Panel, but excluding the CMA

"Transaction" means the proposed acquisition by CareTech of the entire issued and to be issued share capital of Cambian not already owned by or on behalf of the CareTech Group, comprising the Headline Offer and the Full Cash Alternative, to be effected by way of the Scheme (or, under certain circumstances, by way of the Takeover Offer) on the terms and subject to the Conditions set out in this Announcement and to be set out in the Scheme Document, Forms of Proxy and Form of Election and, in each case, where the context admits, any subsequent revision, variation, extension or renewal thereof

"UK" or "United Kingdom" means United Kingdom of Great Britain and Northern Ireland

"uncertificated" or "in uncertificated form" means a share or other security title to which is recorded in the relevant register of the share or security as being held in uncertificated form, in CREST, and title to which, by virtue of the Regulations may be transferred by means of CREST

"US" or "United States" means the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia

"US Exchange Act" means the US Securities Exchange Act of 1934

"US Securities Act" means the US Securities Act of 1933, as amended and the rules and regulations promulgated thereunder

"US Shareholder" a Cambian Shareholder resident or located in the United States

"Volume Weighted Average Price" means the volume weighted average price of the relevant security for the specified number of trading days prior to the specified value date derived from Factset and referring to trading on the London Stock Exchange only

"Voting Record Time" means the date and time specified in the Scheme Document by reference to which entitlement to vote at the Court Meeting will be determined

"Wider Cambian Group" means Cambian and its associated undertakings and any other body corporate, partnership, joint venture or person in which the Cambian and such undertakings (aggregating their interests) have an interest of more than 20 per cent. of the voting or equity capital or the equivalent

"Wider CareTech Group" means CareTech and its associated undertakings and any other body corporate, partnership, joint venture or person in which CareTech and such undertakings (aggregating their interests) have an interest of more than 20 per cent. of the voting or equity capital or the equivalent.

All times referred to are London time unless otherwise stated.