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CareTech Holdings PLC

Preliminary ResultsFor the year ended30 September 2017

CareTech Presentation Team

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• Farouq Sheikh Chairman

• Michael Hill Group Finance Director

• John Ivers Chief Operating Officer

Agenda

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• Executive Summary

• Highlights

• Key Investment Merits

• Moving forward

• Business and Operational Update

• Initiatives Underpinning Growth

• Update on Acquisitions

• Financial Results

• Outlook

• Summary/Conclusions

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Executive Summary

• CareTech has a proven track record of growth, profitability and cash generation over 20 years

• Underlying EBITDA and Diluted EPS have grown by CAGRs of 26% and 20% respectively since IPO

• We operate in c.£12.6bn per annum UK social care sector

• Significant organic growth opportunities and bolt on acquisitions are being driven by:

- Market growing in size and value - Regulatory burden

- Increased outsourcing - Shortfall of specialist beds

• Proven track record of accretive and successfully integrated acquisitions; raised £21m in an up-scaled placing in

February 2015 which included Management investment just over £1.0m

• CareTech raised £37m in new money from Shareholders in March 2017 to fund further accretive acquisitions

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CareTech today

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

• Long term annuity style income stream with strong asset backed balance sheet

• Freehold property portfolio of 205 homes independently valued at £329m

• Growth in the range of complementary services and extended geographical coverage through bolt-on acquisitions

• Specialist operating divisions with client focused care pathway approach:

Young people

Young people residential services

Leaving care 16+

Fostering care

Short breaks/respite

Education

Therapy

Learning services

Recruitment programmes

Career development and retention

Apprenticeships

Adult

Adult learning disability

Mental health

Acquired brain injury

Introduction

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Key Highlights

Share Placement – oversubscribed £37.4m raised

Acquisition – Selborne Care purchased for £16.9m

Accelerated Organic Growth

- Reconfigurations and developments – 9 Adults and 4 Children’s/Young People projects completed

- Property Purchases – Beacon Reach purchased for £3.8m

Improved Quality Ratings - 82% good (CQC)- 88% outstanding/good (Ofsted)

Maintained Occupancy – mature 93% blended 86%

Strengthened Management Team – including 2 MD’s and Quality Director

New and Enhanced IT and Systems – Candidate management system and Data Analytics

A busy and successful year!

DeliveringImproved our Financial K.P.I’s year on year

Together ensuring that we deliver great outcomes for those we care for!

The Journey so far…

Today• UK Market size of £12.6bn per annum

• Capacity of 2,534

• CareTech market share of less than 2%

• Three specialist operating divisions:

– Adult services – incorporating adult learning disability

– Children services – incorporating young people residential services, fostering care and learning services

– Specialist Services – incorporating mental health and acquired brain injury

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At IPO• UK Market size of £2.1bn

• Capacity of 435

• CareTech market share of less than 1%

• One focused operating division – residential and day care services for adults with learning disabilities

12th year on the Public Markets

Underlying EBITDA and Diluted EPS has grown by CAGR of 26% and 20% respectively since IPO

£22.5m

£166.0m

0

50

100

150

200

2005A

2007A

2009A

2011A

2013A

2015A

2017A

Revenue CAGR 18% A

£2.4

£39.9

0

10

20

30

40

50

1 2 3 4 5 6 7

EBITDA CAGR 26% A

m

m

4.10p

38.03p

p

10p

20p

30p

40p

1 2 3 4 5 6 7

EPS CAGR 20% A

Key Investment Merits – Underpinning Growth

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Long Established

Platform for Growth

25 years in social care

Market leader

Long term commissioning

relationships

Consistent year on year

growth in capacity and EBITDA

Passion for Quality Strong and improving quality ratings

Dedicated in house Compliance team

Unique Line of Sight Focus

Care Governance

Favourable Market

Dynamics

UK market size £12.6bn per

annum

Barriers to entry due to

regulatory regime

Growth in number of people

requiring care

Move from NHS to

Community based social care

Exceptional

Freehold Estate

Portfolio

Asset Backed

205 Freehold properties

£329m valuation

Book value £275m

Reconfigurations Programme with strong

project team

Diversified Operations Broad Care Pathway

UK wide operations

Work with over 300 plus

Commissioners

Full age profile of service users

Solid Financial

profile and results

Annuity style income

Cash generative

Revenue/EBITDA growth

EPS growth

Gearing improved in last 3 years

Strategic Initiatives

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Board took a number of Strategic Initiatives in recent years – benefits of which are coming through:

• Creation of complementary care pathways focused on outcomes for Service Users

• Reconfigured existing property assets – meeting market demand

• Investment in People and IT systems

• Strengthening of balance sheet

• Acceleration of Organic Growth and Bolt-on Acquisitions

Moving Forward

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• Managing through market dynamic and headwinds

• More of the same

- Core organic

- Reconfigurations

- Targeted Bolt On Acquisitions

- Geographic and Care Pathway Expansions

• Harnessing technology

- Use to assist with care provision (tele care)

- Validating and tracking outcomes using technology

- Diagnostic tools

. Monitoring and support

• International Development

- Arab Health 2018

- Exploring related opportunities

• Charitable Foundation

- First Social Care Provider

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Business and Operational Update

Working Together ‘Extraordinary days every day’

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Our People

• 5000 plus staff passionate and dedicated

• Well trained and developed• Well led and managed• Supported by tools and back office• High retention and attraction• Our People are Shareholders - share

in success +200 and +250

Those we care for

Positive Outcomes

Supporting 2500 plus people to reach their full potential and independence with life skills

Personalised and tailored It’s all about you User voice essential

Care Pathway

• End to End Services offering progression

• Specialist support teams working with children, young people, adults, their families and commissioners to provide the best solutions for them

• Learning disabilities• Mental Health Issues• Specialist and complex care• Physical Disabilities• Acquired Brain Injury• Fostered

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Expanding our Operational Footprint

Children and Young People Fostering Adults

Areas of specialism • Learning disability

• Mental Health Issues

• Autism Spectrum Conditions

• Complex social, emotional and

behavioural difficulties

• Young people in crisis

• Education and Therapy

• Foster Placements for Children and

Young People with challenging and

complex behaviours

• Family placements for Children and

Young People with disabilities

• Learning disabilities

• Mental Health

• Autism and Asperger’s

• Physical disabilities

• Sensory Impairment

• Dual Diagnosis

• Brain Injury Rehabilitation (ABI)

(new 2016)

Regional coverage • South West (extended 2017)

• Home Counties

• North West (extended 2017)

• North East (extended 2017)

• Midlands

• Scotland (extended 2017)

• Wales

• London, Kent, Sussex, Hampshire

and Essex

• North West England

• Midlands (new 2017)

• Wales

• UK Mainland

• Independent Hospital in

Hampshire

• Specialist ABI Service, Oakleaf in

East Midlands (new 2017)

• Expansion in North West, South

West and Midlands (2017)

Market • £1.5bn p.a. growing 5.7% p.a. • £1.6bn p.a. at 5.2% p.a. • £9.5bn p.a. growing at 5.5% p.a.

Market Share • 3% • 1% • 2%

Growth Potential Significant Significant Significant

Offering a broad range of services across Care Pathway

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Care Pathway – 30 September 2017 Capacity

Our Core Business TodayAdult Learning

Disabilities

Residential

Independent supported living

Community support services

Transitional Services

1,735

% net Growth

from Sept 2016

Adults

Specialist

Services

Residential care

Low secure and step down

Independent supported living

Community outreach

214 1,949 9%

Young People

Residential

Services

Residential care of children

Transitional Services

Education and therapy

284

Children’s & Young People

Foster care Fostering 301 585 9%

Overall Capacity 2,534 9%

Learning

services

Employee Pre-employment and

apprenticeships

509

Initiatives Underpinning Growth

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Our Focus and Approach

• Pioneering provision of specialist social care services across the UK

- Strong Team with focus on positive outcomes in a community setting

• National profile with Local Engagement and Service Delivery

- Powered by CareTech with support infrastructure

- Facilitating growth

- Local ‘brands’ with high quality reputation for excellent service delivery

• Innovative Emerging Models of Care

- Extending Care Pathway (Children’s/Young People – Adults)

• New Partnerships Approach

- Registered Housing Providers as partners

- Health and Social Care Partnering Opportunities

- Evolving payments/funding models

Key Focus Areas to Generate Growth

Core Organic Initiatives

• Continued growth of capacity and occupancy of existing services

- Capacity net growth of up to 5.5% year on year

• Reconfiguring or extending existing services in process

Projects completed

- 9 Adults projects (43 extra beds)

- Wigan new contract win (36 extra beds) August 2017

- 4 Children’s/Young People projects (11 beds)

• Building out from recent acquisitions (after purchase)

- Spark of Genius 4 new projects (20 extra beds)

- ROC North West 3 new projects (18 extra beds includes Beacon Reach)

• Targeting New Acquisitions with capability for growth and excellent track record

- Strong experienced team

- Reputation for getting deals done once agreed to buy

- Enhanced care pathways/acuity and specialism

- Geographic expansion

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Extending Scope and Coverage of Existing ServicesChildren's and Young People

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Hidelow ProjectExtending the highly successful specialist children’s service from Wales into EnglandConverting a holiday let complex in Worcestershire into a 8 bedded Children’s service. Opened November 2017 and currently has the first 2 young people placed. Payback 3.8 years.

Stanbury AvenueLocated in Bristol, opened in the Summer of 2017 as a Supported Accommodation service for Young People transitioning to independence. The service is full and we care for 5 Young People as they enter into Adulthood. Payback 2.5 years.

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Adults Supported Living Services

Essex RoadHertfordshire Third party development of 13 self contained flats for people with Mental Health problems, stepping down from hospital provision. Nine flats currently occupied after 3 months of opening. Payback 2 years.

The AvenueHertfordshire conversion of registered care home into 6 self-contained flats for people with complex needs, full within 2 months of opening. Payback 2.4 years.

Gayton RoadKings Lynn. Third party development of 6 self-contained flats for people with complex needs. Full after 2 months of opening. Payback 2.7 years.

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Spark of Genius

Update on Recent Acquisitions

Strong management team retained and focused on growth based on strong quality service provision.

Since our acquisition in July 2015 we have commissioned the following Residential Care Homes for Children and Young People:

West Cottage - Opened November 2016Brandy Burn - Opened January 2017The Shian - Opened April 2017Easter Hayston – Opened July 2017Oaklea – Opening January 2018.

Average Payback 3.5 years.

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The OakLeaf Group

Update on Recent Acquisitions

• Acquired 14 March 2016• Northamptonshire based provider of specialist

brain injury rehabilitation for men over 18 • Currently has capacity for 122 residential and

nursing places in three different service levels• New 22 bed service opened in 2016 now fully

open at near 100% occupancy• Strong reputation and quality ratings• Excellent geographic and Care Pathways fit with

CareTech, platform for growth of brain injury services

• Management retained

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ROC North West

Update on Recent Acquisitions

Laceby House is a 5 bed home in Oldham for young people with social, emotional and behavioural difficulties. Laceby was purchased on 27 February 2017, opening in June and was full by November 2017.

Fairfield is a 5 bed home in Rawtenstall for young people with social, emotional and behavioural difficulties.

Red Rock is a 5 bed property located in Wigan and will support young people with social, emotional and behavioural difficulties. Purchased 6 October 2017, opened 4 December. To be full in January 2018.

Beacon Reach• Purchased 9 June for £3.8m estimated payback 3.75 years• New Mountwood Academy• 8 Young People transferred in August 2017, currently 13

Young People with development plans to move to 23 over next 12 months

Average Payback for residential projects 3.5 years.

Providers of specialist residential care, supported living services, outreach and day care services for adults with a range of learning disabilities and associated mental health needs including challenging behaviours. Purchased June 2017 for £16.9m.

Retained operational management. Excellent reputation and strong demand for services with over 20 commissioners funding care provision. Residential care services are provided through 8 care services with a combined capacity of 57 beds. Supported Living services are provided to 30 service users. Innovative outreach and day services are also offered.

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New Acquisition

Selborne Care

Initiatives Supporting Our Growth

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Our People – Staff recruitment and retention

• Positive trend on new hires

• Staff turnover 22%, this is below sector average of 30%

• 200+ staff have completed their apprenticeship programme

• 58 managers on our Leadership and Management Care Programme

• 162 participants in 2016 Sharesave Scheme and 258 participants in 2017 Sharesave Scheme

• Recognition at Care awards

- Laing and Buisson (5 finalists – ROC overall winner Best Children’s Service

2017)

- National Care Awards (14 winners – 39 regional winners)

National Living Wage

• Fully Implemented across our business with a review of role differentials• Impacted under half of our operational team• Fee recovery and new placement fees to incorporate extra costs.

Fee Uplifts and Reviews• Contact programme in process for all purchasers/commissioners

• On track to cover the costs of NLW through uplifts (circa 3%)

• Last year achieved cover of NLW (2%) in fees

Systems and Processes

• Time and Attendance – fingerprint recognition live in services generating accurate and timely rota management and real time costing/payroll analysis

• ‘Line of Sight’ RAG Reporting for each home and service across KPI areas that support continuous improvement and growth

• Projects-Data Analytics and Electronic Forms to Launch in 2018

Quality and Compliance

• CQC inspection ratings for our services are 82% good progressed from 73% in 2016

• Ofsted inspection ratings 88% outstanding/good progressed from 82% in 2016

• We undertake regular operational audits of services and independently monitor and inspect services through a national compliance team

Recognition for Our People-

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Our 2017 Care Awards

We celebrated our third CareTech National Care Awards the 23rd November 2017 with a Gala

Lunch 300 nominated guests and sponsors attended. There were 120 service user

nominations for the arts and crafts, with 4 finalists and an overall winner. Our National Care

Awards were also presented, there were13 National winners and one overall National winner.

The guest speaker this year was Seema Malhotra MP for Feltham & Heston.

National Awards – Laing & Buisson

Overall Winner

ROC North West won best Children’s ServicesFinalists were:Best for Management Excellence – ROC North WestBest for Specialist Care – Jon Plummer, Service Manager, Kingston HouseBest for Supported Living – Brisbane Road Supported Living TeamBest for Personalisation – Southlands Team

Divisional breakdown

25Extraordinary days every day

Financial Resultsfor the year ended 30 September 2017

Financial Highlights

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• Revenue increased by 11.4% to £166.0m (2016: £149.0m)

• Underlying EBITDA increased by 7.5% to £39.9m (2016: £37.1m)

• Underlying profit before tax increased by 12.6% to £29.4m (2016: £26.1m)

• Underlying diluted earnings per share decreased by 0.03% to 38.02p (2016:

38.03p)

• Final dividend increased by 5.6% to 6.60p (2016: 6.25p) per share

• Net assets have grown by 34.6% to £204.2m (2016: £151.7m)

• Cash inflows from operating activities were £32.7m (2016: £34.2m)

• Share placing of 11m new shares raising £37m (net of expenses)

twelve months ending2017

Revenue£m

2017Underlying

EBITDA£m

2016Revenue

£m

2016Underlying

EBITDA£m

Adult Learning Disabilities 87.7 26.3 79.4 25.4

Specialist Services 15.5 3.9 10.7 2.7

Sub Total 103.2 30.2 90.1 28.1

Young People Residential Services 43.8 13.2 39.0 11.8

Foster Care 8.6 1.9 8.7 2.2

Sub Total 52.4 15.1 47.7 14.0

Learning Services 10.4 0.9 11.2 1.0

Sub Total 166.0 46.2 149 43.1

Less Unallocated Group Costs (6.3) (6.0)

Total 166.0 39.9 149 37.1

Margin 24.0% 24.9%

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Service Revenue & EBITDA Splitfor the twelve months ended 30 September 2017

Non-underlying items

• 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:

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2017£m

2016£m

Acquisition Costs (0.8) 0.4

Integration, Reorganisation Costs and Redundancy costs (2.9) (1.8)

Costs arising from placement of shares (0.3) -

Profit arising from ground rent transaction - 5.6

EBITDA Adjustment Items (4.0) 4.2

Amortisation of Intangibles (6.9) (5.7)

Financing costs relating to ground rent transactions (1.1) (2.0)

PBT Adjustment Items (12.0) (3.5)

(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

Financials

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Cashflow Highlightsfor the twelve months ended 30 September 2017

2017£m

2016£m

Operating Cash flow before Adjustments 39.9 37.1

Movement in working capital (7.2) (2.9)

32.7 34.2

Capital Expenditure (19.8) (14.3)

Proceeds from sale of ground rents - 29.9

Interest, Dividend & Tax Paid (17.2) (12.2)

Share Placing funds 37.4 -

Acquisitions (16.6) (27.6)

Treasury & Acquisition Related Costs (7.2) (7.9)

Decrease In Net Debt 9.3 2.1

Opening Net Debt (156.4) (158.5)

Closing Net Debt (147.1) (156.4)

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Balance Sheet Highlightsas at 30 September 2017

2017

£m

2016

£m

Tangible Fixed Assets - £327m Valuation 297.2 267.7

Goodwill and Intangibles

Net Debt

84.1

(147.1)

87.0

(156.4)

Other Liabilities (Net) (30.0) (46.6)

Net Assets 204.2 151.7

Actual 2017 Actual 2016

EBITDA: INTEREST 7.2 times 6.0 times

NET DEBT: EBITDA 3.31 times 3.9 times

LOAN: VALUE 46% 51%

Continuing our growth……

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KeyA: ActualC: Consensus estimates

p

2p

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8p

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12p

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2x

3x

4x

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7x

Net debt toEBITDA

Divi pershare CAGR25% A

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2005 A 2007 A 2009 A 2011 A 2013 A 2015 A 2017 A

RevenueCAGR 18%A

EBITDACAGR 26%A

EPS CAGR20% A

Outlook

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IPO 2005 Actual 2017Placing 2015

Direction of Travel

Underlying Market factors remain positive

• Growing market

• Increased outsourcing

• Regulatory burden increasing

• Shortage of specialist beds

Certain Perceived Headwinds

• National Minimum Wage and National Living Wage

• Staffing and staff retention

• Fee rates

• Brexit

Revenue £23m

EBITDA £2.4m

EPS 4.1p

Market size £2.1bn

Market Share 1%

Revenue £123.3m

EBITDA £30.7m

EPS 31.02p

Market size £9.7bn

Market Share less

than 2%

Revenue £166.0m

EBITDA £39.9m

EPS 38.0p

Market size

£12.6bn

Market Share 2%

Next 2 to 3 years

• Another solid year

• CareTech is a profitable, cash generative and asset backed business with an attractive yield

• Highly fragmented market with growth opportunities through organic and acquisition

• Exciting and identifiable opportunities for both organic development, property

related transactions, bolt on acquisitions and reconfigurations

• Firepower boosted by share placement

• Track record of deploying capital in enhanced earnings acquisitions

• Experienced management team whose interests are aligned with shareholders

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SummarySummary