Trading Update

CareTech Holdings PLC

("CareTech" or "the Group" or "the Company")

Trading Update

CareTech Holdings PLC (AIM: CTH), a leading UK provider of specialist social care services, issues the following trading update. The Group expects to announce its interim results for the six months ended 31 March 2011 in the week commencing 13 June 2011.

The trading performance of the Group for the first half of the financial year was in line with Directors expectations and reflects further development of its care pathway range of activities.

During the first six months of our financial year we have increased capacity by 121 places to 1,930 with occupancy levels of approximately 92% in established services and around 87% including facilities being developed.

Fee rate pressure is being experienced across the specialist social care market and we are in discussions with a small number of funding authorities who have requested fee reductions. Annual reviews usually take place following the commencement of the fiscal year and it is therefore too early to judge their overall outcome.

The acquisition of Care UK's children fostering operations and Phoenix Therapy and Care Ltd were announced last December and we are delighted to report that both businesses are performing well. The enhanced geographical coverage of CareTech's fostering services provides a platform for scalable growth, a service which is attractive to placement authorities and it complements our residential children and family assessment activities.

Net debt of £122m at 31 March 2011 was significantly better than Directors expectations mainly due to the reappraisal of a number of bolt-on acquisition opportunities. In the current environment the Board has decided to focus resources on the delivery of organic growth from the existing portfolio in priority to the pursuit of acquisition opportunities, which will only be considered on a selective basis where the Directors believe that the sustainable returns to shareholders are compelling. Consequently this has lowered the Directors' expectations of growth for the full year whilst the reduction in expenditure will provide further headroom on our banking facilities and covenants.

Farouq Sheikh, Executive Chairman commented:

"We are pleased that trading in the first half of our financial year is in line with Directors expectations. The high quality and integrated nature of our range of services places the Group in a favourable competitive position to gain market share in a challenging environment of constrained public spending".

For further information, please contact:

CareTech Holdings PLC 01707 601800

Farouq Sheikh, Executive Chairman

David Pugh, Group Finance Director

Brewin Dolphin Investment Banking 0845 213 4730

Matt Davis

Sean Wyndham-Quin

Buchanan Communications 020 7466 5000

Diane Stewart