Preliminary Results Year ended 30 September 2011

Extraordinary days every day

PRESENTATION STRUCTURE

PRESENTERS: Farouq Sheikh, Executive Chairman

Michael Hill, Group Finance Director

Stewart Wallace, Strategic Director

AGENDA Page

OUR BUSINESS AND THE MARKET: About CareTech 3

Group Highlights 4

Fundamentals of an Investment Case 5

Consistent Growth Trajectory 6

Organic Initiatives 7

Range of Services 8 - 12

PRELIMINARY RESULTS: Financial Highlights 13

EBITDA Bridge 14

Services Revenue and EBITDA Split 15

Non Underlying Items 16

Cash flow Highlights 17

Balance Sheet Highlights 18

Bank Facility and Covenants 19

SUMMARY 20

2

ABOUT CARETECH

• The leading specialist provider of social care for children and adults with complex needs

• Founded in 1993

• Floated on AIM – 2005 and progressively grown from 423 places (at float) to 2,056 on 30 September 2011

• Highly visible long term income stream with strong asset backed balance sheet•

• Sharp market awareness and innovative care pathway approach

• Strategy of selective acquisitions and investment in organic growth

• National profile supported by a strong regional structure for service delivery

• Dedicated specialists support growth

3

• Strategic review update

• Delivering quality services and reliable growth in a complex

market:

• Turnover at £109.2m up 21.7%

• EBITDA at £23.2m up 3.6%

• PBT at £15.9m down 3.0%

• Cash backed EBITDA

GROUP HIGHLIGHTS

• Capacity increase of 247 (14%) to 2056

• Divisional structure implemented with segmental reporting

• Care pathways extended across the group with closely integrated

care planning and cross referrals

• Good position against our peer group

• Safe and dependable services

• Quality reputation

• Strong balance sheet

4

FUNDAMENTALS OF AN INVESTMENT CASE

Strong organic growth opportunities– There is an undersupply of places linked to increasing demand

– Market dynamics favour the larger specialist providers

– Complementary service options – a high acuity specialist social care pathway

– Local authorities keen to manage the market through procurement arrangements with the major suppliers

– Commissioning policy changes create organic growth and re-configuration opportunity

– Powerful product development team

• Acquisition growth opportunities as a foundation for organic development– Acquisition is no longer a major driver but retains a strategic significance

• Many small operators are unable to cope with aggressive regulation and on-going cost pressures

• Exit generates opportunity for larger players

– CareTech’s solid reputation as a provider of high quality and strong regulatory compliance supports opportunity

• Strong defensive characteristics– Revenue derived from statutory public sector duties

– Length of resident stay measured in decades

– Strong asset backing

– Resilient recession play

– Financial flexibility

– Strong cash flow

– Free cash supports organic growth

5

CONSISTENT GROWTH TRAJECTORY

Maturing of ALD

provision and

realignment of services

A strong operational and development team creates the platform for

• Organic growth

• Market penetration

• Geographical expansion

Current performance

Acquisitions average < 5 x EBITDA

Organic developments average < 3 x EBITDA

Learning Disability

provider offering

specialised residential

care solutions for adults

with complex needs

Developed additional

community services

Build in mental health

services and residential

care of children with

complex needs

realignment of services

in line with policy shifts

Organic development

of mental health and

child care leads to a

natural evolution into

fostering and

complementary

specialised community

provision

Organic developments average < 3 x EBITDA

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ORGANIC INITIATIVES

Examples of work in hand - generated by service re-configuration or simple organic growth that anticipates market trends and commissioner aspiration

• Poppy Lodge Back-Land development Becomes a 6 person children service

• Morven House Out of date model for 12 Becomes 8 person MH Supported living service

• Chestnut Demand change previously 10 Becomes 10 person LD Supported living service

• Ashwood Out of date model for 12 Becomes 7 person LD Supported living service

• Sunnyside Demand change previously 9 Becomes 7 person MH Supported living service

• Corner House Out of date model for 15 Becomes a novel mix of MH support services for 10

7

Children and

Young Persons

Residential

• Residential care of children 108

Fostering and

Family Services

• Family assessment

• Fostering

401

Care Pathway

September 2011

Capacity

Capacity at September 2011– 2056 places

RANGE OF SERVICES AND GEOGRAPHICAL COVERAGE

Family Services • Fostering

Mental Health

and Specialist

Care

• Residential care

• Low secure and step down

• Independent supported living

• Community outreach

134

Adult Learning

Disability

• Residential care

• Independent supported living

• Community support services

1413

2056

8

ADULT LEARNING DIFFICULTIES

MARKET

• 1.4m people in the UK have a learning disability

• 185,000 of these cannot live independently

• UK market for adult residential LD worth £3.2bn

• 5.5% p.a. market growth rate

• Highly fragmented, CareTech is the second largest

provider with less than 2% market share

OPERATIONS (30 September 2011)

STRATEGY

• Care pathway

• Focus on bed fill of existing portfolio, organic

developments and leasehold solutions

• Bolt-on acquisitions when compelling

RESIDENTIALSUPPORTED

LIVING

COMMUNITY

SUPPORT

• Capacity: 1,413 places

Occupancy: 87.7%

Average weekly fee: £1,220

Turnover: £75.8m

EBITDA £18.0m

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YOUNG PEOPLE RESIDENTIAL SERVICES

MARKET

• 17,000 children in England looked after outside foster care

• Residential children’s market across England worth £1.0bn

• 5.7% p.a. market growth rate

• Highly fragmented

STRATEGY

• Care pathway

OPERATIONS (30 September 2011)

• Educational and specialist support

• Focus on bed fill of existing LD portfolio, strategic EBD

acquisitions and organic specialist EBD developments

• EBD acquisitions successfully integrated and specialist teams

being established

• Additional capacity growth in North Wales, South

• Wales and Shropshire through organic developments

LEARNING DIFFICULTIES SUPPORTED

LIVINGSPECIALIST EBD

FOSTER CARE

• Capacity: 108 places

Occupancy: 74.1%

Average weekly fee: £3,512

Turnover: £14.2m

EBITDA £4.5m

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FOSTER CARE AND FAMILY SERVICES

MARKET

• 47,000 children in England are in foster care

• Foster care market across England worth £1.1bn

• 7% p.a. market growth rate

• CareTech is a top ten provider with less than 1% market

share

STRATEGY

OPERATIONS (30 September 2011)

• Care pathway

• Organic growth with current placement authorities

• Tender for adjacent territories

• Acquisition of quality IFA’s in new geographical regions

• Turnaround of Care UK fostering operations and integration of

acquisitions

• I.T. systems reorganised onto common platform

• Capacity: 401 places

Occupancy 88.5%

Average weekly fee: £802

Turnover: £13.0m

EBITDA £3.3m

RESIDENTIALFOSTER

CARE

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MENTAL HEALTH

MARKET

• 2.4% of the UK population will be referred to a specialist

psychiatric service

• NHS/LA spend on mental health is £12bn

• Independent care homes for mental health in England cost

£685m, with non-residential costing a further £281m

• 70% of prisoners have mental health problems

OPERATIONS (30 September 2011)

STRATEGY

• Care pathway

• Focus on bed fill of existing portfolio, leasehold supported living

and growth in outreach services

• Bolt-on acquisitions when compelling

• Acquisitions have been successfully integrated

• Positive engagement with placement authorities

RESIDENTIALLOW SECURE &

STEP DOWN

SUPPORTED LIVING

& OUTREACH

• Capacity: 134

Occupancy: 76.9%

Average Weekly fee: £1,095

Revenue: £6.2m

EBITDA £1.9m12

Financial

• Revenue increased by 21.7% to £109.2m (2010: £89.7m)

• EBITDA increased by 3.6% to £23.2m (2010: £22.4m )

• PBT decrease of 3.0% to £15.9m (2010 : £16.4m)

Operational

• Capacity growth of 14% (247) to 2,056 places

• Extending care pathway range of specialisms into

fostering, family assessments, EBD and MH hospital

• Extended geographical reach

FINANCIAL HIGHLIGHTS

• Diluted EPS decrease by (8.0)% to 25.4p (2010: 27.6p)

• Operating cash inflow of £22.2m (2009 : £19.8m)

• Full year dividend up by 9% to 6.0p (2010: 5.50p)

• Net debt at £127.3m (2010: £113.2m);

• Extended geographical reach

• Invested in acquisition/development infrastructure

• High quality ratings

• Acquisitions performing in-line with expectations

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EBITDA BRIDGE

for the year ended 30 September 2011

EBITDA

£ millions

EBITDA 2010 22.4

Fee pressures (1.0)

14

Reconfigured homes (1.5)

Divisional Structure Investment (1.1)

Acquisitions during the year ended 30 September 2011 1.4

Growth of existing services 3.0

23.2

2011Revenue

£m

2011

UnderlyingEBITDA

£m

2010Revenue

£m

2010 Underlying

EBITDA£m

ADULT LEARNING DIFFICULTIES 75.8 18.0 72.2 19.9

YOUNG PEOPLE RESIDENTIAL SERVICES 14.2 4.5 8.2 2.6

SERVICES REVENUE & EBITDA SPLIT

for the year ended 30 September 2011

FOSTER CARE AND FAMILY SERVICES 13.0 3.3 5.9 1.9

MENTAL HEALTH 6.2 1.9 3.4 1.0

109.2 27.7 89.7 25.4

LESS UNALLOCATED GROUP COSTS(4.5) (3.0)

109.2 23.2 89.7 22.4

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• In last year’s accounts ‘Acquisition and development related staff costs’ were not charged against EBITDA(i). The

accounts have been restated for 2010 to reflect this reduction to EBITDA(i).and the same treatment has been applied in 2011

• The disclosure of certain current and non-current liabilities has been enhanced and more clearly demonstrates their

future impact on net debt. IFRS also requires changes in acquisition fair values to be restated for the prior period.

• Adjustment items charged / credited in the Income Statement are as follows:

NON UNDERLYING ITEMS

Year ended30 September 2011

£’m

Year ended30 September 2010

£’m

ACQUISITION FEES (1.3) (3.6)

POST ACQUISITION INTEGRATION AND REORGANISATION COSTS (0.9) (1.1)POST ACQUISITION INTEGRATION AND REORGANISATION COSTS (0.9) (1.1)

DIVISIONAL REORGANISATION AND REDUNDANCY COSTS (0.8)

(3.0) (4.7)

FAIR VALUE ADJUSTMENTS FOR PRIOR YEAR ACQUISITIONS (0.2) (0.6) Non-cash

BARGAIN PURCHASE CREDIT 0.8 3.8 Non-cash

ADJUSTMENTS FOR MINIMUM FUTURE LEASE PAYMENT UPLIFTS (1.5) (1.5) Non-cash

ONEROUS LEASE PROVISIONS RECOGNISED (0.6) ------ Non -cash

EBITDA ADJUSTMENT ITEMS (4.5) (3.0)

AMORTISATION OF INTANGIBLES (3.6) (0.9) Non-cash

LOAN FINANCE ARRANGEMENT FEES (1.7)

CHARGES RELATING TO DERIVATIVE FINANCIAL INSTRUMENTS (0.4) (3.2)

PBT ADJUSTMENT ITEMS (8.5) (8.8)(i) EBITDA is operating profit stated before depreciation, share-based payments charge and adjustment items(ii) Profit before tax and diluted earnings per share are stated before adjustment items 16

CASHFLOW HIGHLIGHTS for the year ended 30 September 2011

2011£m

2010£m

OPERATING CASH FLOW BEFORE ADJUSTMENTS 23.2 22.4

SHARE ISSUE - 14.6

23.2 37.0

ACQUISTIONS & CAPITAL EXPENDITURE (20.7) (43.0)

INTEREST, DIVIDEND & TAX PAID (8.9) (5.8)INTEREST, DIVIDEND & TAX PAID (8.9) (5.8)

TREASURY & ACQUISITION RELATED COSTS (7.7) (8.0)

DECREASE / (INCREASE) IN NET DEBT (14.1) (19.8)

OPENING NET DEBT (113.2) (93.4)

CLOSING NET DEBT (127.3) (113.2)

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2011

£m

2010

£m

TANGIBLE FIXED ASSETS- £228M VAL’N 189.5 184.1

GOODWILL AND INTANGIBLES

DEFERRED CONSIDERATION

NET DEBT

66.5

(6.6)

(127.3)

53.1

(7.2)

(113.2)

OTHER LIABILITIES (NET) (48.9) (46.8)

BALANCE SHEET HIGHLIGHTS

as at 30 September 2011

OTHER LIABILITIES (NET) (48.9) (46.8)

NET ASSETS 73.2 70.0

KEY BANK COVENANT REQUIREMENTS 2011

EBITDA: INTEREST 2.75 times

NET DEBT: EBITDA 5.50 times

LOAN: VALUE 70%

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FACILITY

• £157m maturing in April 2013

• Includes £80m term loan amortising to a bullet of £66.5m

• Term loan margin of LIBOR + 1.75%, with revolving credit margin of LIBOR + 2.25%

• £55m of interest rate hedging to cap LIBOR at 2.75% until April 2013

BANK FACILITY AND COVENANTS

COVENANTS: Covenant 30 September 2011Headroom

£mCOVENANTS: Covenant 30 September 2011 £m

Net debt: EBITDA 5.5 times 4.5 times 25/4

Loan: Value 70% 61% 21/30

EBITDA: Interest 2.75 times 3.45 times 5/2

EBITDA: Interest & rent 1.85 times 2.40 times 7/4

Free cash flow: Bank payments 1:1 1.3:1 4

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• Market fundamentals and business performance support CareTech’s growth trajectory

• A consistent track record of delivery backed by a dynamic top team and high quality middle management

• Our strengthened care pathway delivers across the social care spectrum

– Drives service user and commercial opportunity

– Helps service user retention

– Minimises exposure to shifts in policy or purchasing trends

–

SUMMARY

– Positions the company to deliver a “One-Stop” solution for hard pressed commissioners and care managers

• Our investment in a vigorous infrastructure of high quality is already delivering growth and is a cornerstone

for future success

• We continue to deliver growth and financial performance in line with City expectation

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