Trading Update

CareTech Holdings PLC

("CareTech" or "the Group" or "the company")

Trading Update

Three further acquisitions for a cash consideration of £16.1m

CareTech (AIM: CTH), a leading UK provider of specialist social care services issues the following trading update. The Group expects to announce its preliminary results for the year ended 30 September 2010 on 9 December 2010.

CareTech is pleased to report further significant growth:

·; Trading for the year to 30 September 2010 is in line with management's expectations and reflects the development of organic activities and further acquisitive growth.

·; Occupancy across the Group's established services continues to run at between 92% and 93% providing longevity and visibility of our cash backed income stream. 

·; During the financial year we increased capacity by 379 places, adding 101 through organic growth and 278 through the strategic acquisition of six businesses.

·; The three acquisitions which we announced in June 2010 (Greenfields, St. Michael's and Outlook) came with an initial capacity of 140 places and have subsequently performed in line with management's expectations.

·; We are delighted to announce the acquisition of a further three businesses each of which complement our strategy of providing a range of specialist social care services across an expanding geographical area. With a combined consideration of £16.1m these acquisitions increase capacity by 138 places. Some of the key attractions of each acquisition are as follows:

Park Foster Care ("Park") is a high quality, tier 1 provider of fostering services with well established relationships across a number of local authorities. Based in Nantwich, Park joined the Group with 87 child placements and is an attractive extension to the geographical coverage of CareTech's fostering services;

Branas Isaf has the capacity to support 21 children with complex Emotional and Behavioural Disorders (EBD). The services, provided from freehold properties based in North Wales, further extend the Group's range of children's EBD solutions and their specialist nature attracts local authority placements from a wide geographical reach;

Uplands is a community-based, freehold mental health hospital in Hampshire, with a capacity of 30. The acquisition of Uplands provides exciting opportunities for the Group to extend its specialist mental health capability and develop complementary services from a well established platform.

·; Net debt at 30 September 2010, following the above acquisitions, was approximately £115m.

During the financial year to 30 September 2010 considerable progress has been achieved by the Group. Following our £15m share placing and £165m bank refinancing we have continued to expand our care pathway range of specialist social care services and invested further in the management structure to support this growth.

Quality underpins the CareTech approach. Alongside the business growth outlined above, the company has seen a further uplift in official quality ratings for its services, from an outstanding base position at the start of the year. This combination of quality accretion and business development positions the Group as an industry leader growing market share in an evolving public sector environment.

The Group continues to evaluate further selective acquisition opportunities alongside organic growth in order to develop the geographical and care pathway range of services, whilst consolidating the highly fragmented specialist markets in which we operate.

Farouq Sheikh, Executive Chairman commented:

"Capacity growth is again ahead of management expectations and the six strategic acquisitions which have joined the Group during the financial year to 30 September 2010 further enhance our range of specialist services across a wider geographical area. The Group is well placed to work in partnership with local authorities in providing a range of high quality, efficient placement solutions which support their objectives whilst delivering further growth for CareTech. We remain confident about the future prospects of the Group."

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