Extraordinary 
days every day
Annual Report  
and Accounts 2015
CareTech Holdings PLC Annual Report and Accounts 2015 Extraordinary days every day Purpose
Delivering innovative social care on  
behalf of local authority and health service 
commissioners, CareTech has a long- 
established reputation as a provider of high 
quality and safe services. CareTech offers  
a comprehensive outsourcing service  
to commissioners with the experience  
and commitment to provide exactly  
what is required.
Focusing on the high acuity social care 
population we support children and adults 
through solutions that are both individual  
and tailor made to each of our service users.
Our core services provide for people with 
learning disabilities, individuals who have or 
are recovering from mental illness, people 
with autistic spectrum disorder and people 
who have one or more physical impairments. 
We deliver support through residential 
services and a wide choice of creative  
home-based options.
Our children services cover assessment, 
residential care, education and fostering 
options, including specialist provision for  
Strategic Review  
1 Highlights 
2 Group at a glance 
10 Chairman’s Statement 
12 Strategic Report 
20 Chief Executive’s Statement 
 & Performance Review 
26 Financial Review
Governance 
30  Board of Directors
32 Corporate Governance Report 
35 Directors’ Report 
37 Remuneration Report  
39   Statement of Directors’  
Responsibilities
Financial Statements 
40 Independent Auditor’s Report 
41 Consolidated Statement  
 of Comprehensive Income 
42 Consolidated Balance Sheet 
43 Consolidated Statement of  
 Changes in Equity 
44 Consolidated Cash Flow Statement
45 Notes to the Financial Statements 
66 Company Statement of  
 Changes in Equity 
67 Company Balance Sheet 
68 Company Cash Flow Statement 
69 Company Notes 
73 Directors and Advisers
High quality support and care 
for individuals who often have 
complex needs. CareTech 
delivers safe and secure support 
of very high quality, ensuring 
that all our service users enjoy 
extraordinary days, every day.
Contents
very complex young people. We carefully  
and professionally support any child 
irrespective of their reasons for being  
in public care. We can provide the right 
solution for complex and difficult situations 
through our nationally recognised expertise in 
provision for children and young people who 
present with sexually offending behaviours or 
who have emotional and behavioural 
disorders. Our comprehensive service 
includes education in Ofsted registered 
schools of very high quality.
CareTech pioneered transition services  
for young people leaving care and for adults 
who are making the move into their own 
home after a lifetime in residential or 
institutional settings. We remain a national 
leader in the drive to enable people to live 
in a home of their own.
We believe in opportunity and have 
developed an enviable reputation as a 
leading provider and organiser of modern 
apprenticeships within exciting projects 
across the UK. £124.3m
Revenue 
increased by 0.8% (2014: £123.3m)
Statutory financial 
highlights
£32.5m
Underlying EBITDA
(i)
 
increased by 5.9% (2014: £30.7m)
£26.8m
EBITDA
(iii)
 
decreased by 5.3% (2014: £28.3m)
13.80p
Diluted earnings per share 
decreased by 42% (2014: 23.85p)
£22.0m
Underlying profit before tax
(ii)
 
increased by 11.7% (2014: £19.7m)
£17.8m
Operating profit 
decreased by 13.2% (2014: £20.5m)
31.79p
Underlying diluted earnings per share
(ii)
 
increased by 2.5% (2014: 31.01p)
£30.8m
Cash inflows from operating activities  
before adjustment items 
(2014: £30.3m) with net debt of  
£158.5m (2014: £166.1m)
2,116
Overall care capacity
(iv)
  
increased by 42
 
(2014: 2,074)
£294m
Property portfolio 
independently valued (2014: £275m)
5.60p
Final dividend per share 
increased by 3.7% (2014: 5.40p)
£28.3m
Cash inflows from operating activities 
(2014: £26.1m)
Highlights
(i) Underlying EBITDA is operating profit stated before depreciation, share-based payments charge and non underlying items
(ii) Underlying profit before tax and underlying diluted earnings per share are stated before non underlying items.
(iii) EBITDA is operating profit stated before depreciation, share-based payments charge and amortisation of intangible assets.
(iv) Overall capacity has increased by 42 reflecting the net of 45 additional beds now available and 48 beds with the acquisition of  
Spark of Genius, less 27 beds withdrawn for reconfiguration, five places less in small supported living packages and 19 reduction  
for carers not currently accepting children.
Strategic Review Governance Financial Statements
1 CareTech Holdings PLC Annual Report and Accounts 2015 The CareTech Group has evolved 
through a mix of organic and prudent 
acquisitive growth that has led to  
our current position as one of the 
best-established and reputable 
national social care providers. We 
have national coverage in a highly 
fragmented UK social care market. 
We cover the majority of the social  
care spectrum except elderly care.
CareTech has always operated at the highest 
acuity range on the social care spectrum, 
providing individual tailor made solutions for 
people living in their own homes, residential 
care or independent supported living 
schemes. We believe that we should 
continue supporting those with the greatest 
need and this accords with local authority 
commissioning trends.
Adults with learning disabilities are 
increasingly being provided with direct 
funding to enable them to purchase their 
own care and support. We work actively 
with service users and advisory bodies to 
deliver self-directed support packages and 
see this as an increasingly important aspect 
of our service model, as well as offering 
commercial opportunity.
For many people with the most complex 
intellectual or physical challenges, 
residential care will continue to be the 
preferred option although the services will 
change in their approach as we move toward 
a more enabling, modern type of service. 
An alternative to residential care is the 
opportunity for people to live in a home of 
their own, sometimes shared with others. 
CareTech is a leader in the provision of 
supported living and offers packages of 
individualised self-directed support to 
people in their own homes.
“Foster Care is on a rising trend in terms  
of both numbers placed in foster care  
and expenditure by local authorities.”  
Laing and Buisson 2013.
Foster Care is undoubtedly the best care 
solution for most “looked after” children.  
Most children thrive in foster care where  
they are supported within an ordinary  
family home and with trained foster carers. 
CareTech provides for both mainstream and 
specialist foster care through local agencies 
across the UK. Unusually we offer a highly 
respected service for physically and 
intellectually disabled children as well  
as support for children with sensory 
impairments. We provide foster care  
family assessments and ongoing support  
to children who remain with their birth 
families and in their family home.
Mental health provision continues to 
dominate the health and social care  
agenda. Good mental health is a significant 
contributor to a healthy community and 
national economy, while mental ill health is 
devastating to individuals and their families. 
Most commissioners are driven by a wish to 
reduce patient time in acute care and rely on 
creative outsourcing to dramatically cut the 
cost of mental health care in hospital and 
within the criminal justice system.
CareTech’s mental health team works  
in partnership with the NHS and social service 
departments to ensure a successful transition 
out of acute care and the prison service, 
delivering pathways to an ordinary life. We 
also have an outstanding track record for 
diverting people away from acute care 
and supporting them in their own homes. 
CareTech’s highly effective care teams are 
developing new ways to offer community 
support solutions and we believe that this  
will be an important growth platform in  
years to come.
The total market value is estimated (Laing  
and Buisson 2013) to be worth £7bn for  
children services and £8bn for the care of  
younger adults (below 65 years of age) in  
the learning disability and mental health 
categories. The private sector share of this  
market has developed through successful 
outsourcing of services and this trend is  
expected to continue. Local Authorities  
have largely protected their budgets for  
children and complex younger adults.
Adult Learning 
Disabilities
Mental
Health
Foster
Care
Capacity 1,496 (2014: 1,450)
Split by – Residential care
–  I n de p e n de n t s u p p or t ed  
living
–  Community support services
Capacity 114 (2014: 151)
Split by – Residential care
–  I n de p e n de n t s u p p or t ed  
living
–  Co m m u n i t y o u t r e a ch
Capacity 301 (2014: 320)
Split by –  Residential care of children 
and young people
–  Family assessments in 
the home
Adult Services Children Services
Caring 
every day
2 CareTech Holdings PLC Annual Report and Accounts 2015
Group at a glance For a relatively small number of children, 
residential care offers a safe and helpful 
solution for their care needs and CareTech 
has developed an extensive range of highly 
technical care environments where those 
children will thrive.
Our residential provision offers high staff 
ratios and highly skilled carers, capable  
of ensuring both safety and progression. 
These are high cost services where we aim 
for an intensive period of care and a strict 
timetable that delivers results at a fair price  
to commissioners. As far as practicable  
we aim to help these children move into a 
more normalised family style environment  
as soon as it is wise to do so.
These services are highly intensive 
operations with exceptional staff ratios 
and include on-site or dedicated 
educational facilities.
Since modern apprenticeships started  
several years ago we have witnessed a 
dramatic shift in the way young people enter 
the adult workforce. People are increasingly 
opting for an apprenticeship as an alternative 
to or as well as attending University. This  
was especially true of the Care Sector but a 
whole new generation of young people are 
now looking at the apprenticeship model  
as their further training of choice.
Through acquisition and the development  
of established apprenticeship providers 
CareTech has embraced the opportunity  
to capitalise on this change and to work 
closely with Government agencies to improve 
the quality and skill base of our national 
workforce. We have chosen to call our 
apprenticeship scheme a Learning Service  
to reflect the aspiration of the young  
people we work with.
Although EQL Solutions provide training 
across the whole workforce we have  
naturally developed expertise within  
the very extensive social care sector.
Learning services addresses an adult social 
care workforce in England of some 1.16m 
people, 905,000 of whom work within the 
independent sector (Skills for Care 2013).
There are 17,300 organisations providing 
Adult Social Care in England and the 
majority of these are operating at far too 
low a scale to deliver their own training or 
apprenticeship programmes. EQL Solutions 
and Dawn Hodge Associates, which was 
acquired in the year, have significant 
market presence in social care and are 
well positioned to support both smaller 
companies as well as corporate providers.
The Government aims to increase the 
number of apprenticeship starts for younger 
people and has committed to providing an 
additional £40m for 20,000 new higher 
apprenticeship starts in the current (2015/16) 
academic year.
Capacity 205 (2014: 153)
Split by –  Residential care of children 
and young people
–  Education services for 
children and young people
Capacity 301 (2014: 320)
Split by –  P r e e m pl o y m e n t  
programmes
–  D e v e l o p m en t p r o g ram m e s
–  A p p r en t i c e s hi p s
Young People 
Residential 
Services
Training
Learning Services –  
EQL Solutions and Dawn 
Hodge Associates
3 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements Quality
Hilary Knell has been attending the centre 
for approximately 12 years where she has 
learnt to cook meals from scratch. 
Quality is not simply compliance 
with the requirements of 
regulation, although that remains 
important. Our approach is to 
employ well qualified and skilled 
professionals who can ensure 
that we consistently exceed the 
expectation of our service users, 
their families, social workers 
and commissioners.
Placing people in the care of 
organisations that you can trust 
The business of care is predicated 
on relationships, as much as it is on 
the practical support and guidance 
that we offer on a daily basis. 
Troubled children need the warmth 
and challenging support of their care 
workers while disabled adults make 
best progress within the trust that  
a great relationship brings.
We are also mindful that social 
workers will prefer to place people in 
the care of organisations that share 
their commitment to optimism for 
service users, that they can rely on 
and deliver outstanding value.
4 CareTech Holdings PLC Annual Report and Accounts 2015 5 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements 6 CareTech Holdings PLC Annual Report and Accounts 2015 CareTech Group has stood 
out within its peer group of 
providers as a company that 
can successfully combine 
quality, integrity and sound 
financial acumen and has 
consistently achieved high care 
quality ratings. Our credibility as 
the provider of choice has never 
been stronger and we continue 
our successful growth strategy 
with a confident outlook.
Choice
Innovative Care Pathways 
One of the characteristics that 
differentiates CareTech from the 
average provider is our commitment 
to opportunity. Long before it became 
fashionable we introduced the 
concept of a Care Pathway to reflect 
our optimism that users of our 
services can make progress in their 
lives. We were never content to accept 
that someone in residential care 
should always be in residential care 
and developed alternatives at an early 
stage in our development as a Group.
Stuart Ravenscroft lives in a service at CareTech and he 
attends the centre for craft sessions, music and movement 
and woodwork. Stuart has been coming here for many 
years and is very proud of the work he achieves in our 
craft sessions, which also encourages recycling materials.
7 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements National presence 
CareTech is very well known as a 
care company in public ownership 
that operates throughout England, 
Scotland and Wales. Our national 
presence is reinforced through 
conferences and publications where 
the CareTech view is frequently 
sought and taken into account.
Strong brand 
Financial security, probity and 
reliability combine to offer 
confidence in the CareTech brand. 
We offer high quality services with a 
strong ethical base with the benefits 
of scale, operating within friendly 
and trusted local service businesses.
We are delighted to announce the 
acquisition of Spark, whose impressive 
growth in the past few years reflects 
the quality and innovation of its services 
and the strength of its local authority 
relationships.
Spark of Genius joined the 
CareTech Group in July 2015.
Through their education-
based approach they have 
become the market leader 
in their sector in Scotland. 
With the existing management 
team they will continue to 
develop the business and 
the services provided.
Growth
8 CareTech Holdings PLC Annual Report and Accounts 2015 9 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements I am pleased to present our results for the  
year ended 30 September 2015. This has been 
a successful and exceptionally busy year the 
key highlights of which have been:
 – Share placing funds raised of £21m 
 – Strengthening of management team
 – Amending and extending banking facilities  
on improved terms 
 – Increased organic initiatives
 – Completion of two acquisitions during  
the year and one in December 2015
Whilst the management team has been actively 
involved with these important initiatives it is 
really pleasing to note that we have continued 
to maintain our position as an excellent care 
provider with our high quality ratings across the 
Group. Moreover, we have extended our care 
pathways through successful outcomes for 
the people we support. As a result we have 
improved our occupancy rates during the year 
which has led to an increase in our underlying  
EBITDA margin.
This has produced a credible set of financial 
results where:
 – Underlying EBITDA has increased by 5.9%  
to £32.5m
 – Underlying PBT has increased by 11.7%  
to £22m
 – Underlying diluted EPS had increased  
by 2.5% 
 – Full year dividend increased by 5% to 8.40p 
All of the above mentioned initiatives 
have assisted the team in delivering a solid 
performance on both the key financial and 
non-financial metrics and puts the Group  
in the strong position to target double digit 
underlying EPS growth going forward.
CareTech Group has stood out within its peer 
group of providers as a company that can 
successfully combine quality, integrity and 
sound financial acumen and has consistently 
achieved high care quality ratings. Our 
credibility as the provider of choice has never 
been stronger and we continue our successful 
growth strategy with a confident outlook.
As announced in March 2015 the company 
raised £21 million (before expenses) by way  
of a placing with new and existing institutional 
investors as well as Directors and certain 
Senior Executives. It was pleasing that the 
placing was oversubscribed and our plan  
was to invest the money in acquisitions within  
12 months. Investment of the funds has been 
completed earlier than planned with two 
acquisitions in July 2015 (Spark of Genius  
and Dawn Hodge Associates) and one on  
1 December 2015 (ROC North West). In July 
the Group completed negotiations to improve 
its banking facilities and to extend the facility 
by a further two years to January 2019, with 
the addition of a £30m Accordion facility.
During 2015 we closed several services for 
reconfiguration which impacted the growth  
in Revenue. Offsetting this there are better  
fees following our reconfiguration cost saving 
initiatives and the time and attendance system 
has improved underlying EBITDA. The Group’s 
Organic Development Programme will 
continue with further reconfigurations and  
for 2016 we have a strong pipeline of 
development opportunities.
CareTech joined AIM in 2005 and we are 
therefore celebrating our 10th year in the 
public markets. During this time the business 
has transformed from being very focused on 
supporting adults with a learning disability 
through residential and day care settings to 
one where today we cater for young people 
and children with complex needs across a 
range of settings, be it residential, supported 
living or community support. We focus on the 
most complex and vulnerable young people 
and the market for this client group stands at 
over £10bn. There is currently an undersupply 
of specialist beds in the niche area and the 
market is growing by almost 3% per annum. 
Over the years we have developed a range  
of care pathways and helped many that we 
support to live more independently. This  
is a fantastic outcome for both us and the 
individuals that we support and it also helps 
local authorities meet the ever increasing  
cost of social care provision.
On joining AIM in September 2005 the 
company had a capacity of 435 places,  
an underlying EBITDA of £2.4m with our 
underlying diluted EPS of 4.1p. Today our 
capacity has increased almost five fold  
to 2,116, our underlying EBITDA has  
grown significantly to £32.5m today  
whilst underlying diluted EPS has risen  
to 31.79 pence per share. Underlying  
EBITDA and diluted EPS has grown  
by an impressive CAGR of 30% and  
25% respectively since IPO.
Even with significant growth we have 
achieved to date we still have less than 2%  
of this very large and fragmented market.  
With the increasing regulatory burden,  
the opportunity for further consolidation is 
even more attractive. Given our experienced 
management team, our range of care 
pathways focused delivering positive 
outcomes for the individuals we support  
and our long established track record within 
the industry we are extremely well placed  
to be able to continue to do this going 
forward. This underpins our aspirations  
to deliver double digit EPS going forward. 
Dividend
The Group policy has been to increase the 
total dividend per year broadly in line with  
the movement in underlying diluted earnings 
per share.
That growth in 2015 was 2.5% so the Board 
has proposed a final dividend of 5.60p  
(2014: 5.40p) per share bringing the total 
dividend for the year to 8.40p (2014: 8.00p) 
per share. This represents a full year increase 
of 5% year on year. The final dividend will  
be paid, subject to shareholder approval,  
on 9 May 2016, with an ex-dividend date  
of 3 March 2016 and an associated record 
date of 4 March 2016.
Whilst the management team  
has been actively involved with  
these important initiatives, it is  
really pleasing to note that we  
have continued to maintain our 
position as an excellent care  
provider with high quality  
ratings across the Group.
A busy 2015 creating a 
springboard for further growth
Farouq Sheikh 
Chairman
10 CareTech Holdings PLC Annual Report and Accounts 2015
Chairman’s Statement Our Board
There have been no changes to the Board 
during the year. As a foundation for growth 
the Senior Executive Team at CareTech has 
been strengthened with the appointment  
on 14 April 2015 of John Ivers as Chief 
Operating Officer. We have made several 
other senior appointments underpinning  
the growth of the business.
During the year the Remuneration Committee 
and the Audit Committee were unchanged 
whilst Michael Hill left the Care Governance 
and Safeguarding Committee and the Clinical 
Director Dr. Junaid Bajwa and the Chief 
Operating Officer John Ivers both joined  
the committee.
Our People
We have completed our planned evolution  
into two well defined operating divisions, 
Children and Adult Care, and this has 
generated organisational efficiencies. 
Simplifying the structure has also supported 
planning and service delivery with a more 
powerful approach to development.
Managers and front line colleagues have 
continued to deliver exceptional commitment 
during the year, working vigorously with 
commissioners to reduce costs while 
maintaining quality. The most striking 
achievement of our front line staff has been  
to ensure the continuing safety of our service 
users during a period when demands for cost 
reduction could have put individuals at risk. 
Our continuing growth, measurable success 
and forward-looking approach are a reflection 
of the hard work and dedication of staff and 
managers throughout the organisation. I am 
always drawn to the achievements of our 
excellent front line staff, which is inevitable as 
we are first and foremost a care organisation. 
Their care and commitment would be much 
less without the dedicated support of our 
administrators and support teams whose hard 
work and energy is critical to the success of 
our company and the care we provide.
Outlook and Prospects
We understand the market and have 
anticipated shifts in social and health policy. 
Our understanding of the social care 
environment remains strong and we are 
positioned to take further change in our stride 
and have an improved platform for growth. 
With the money raised from shareholders  
and our own free cashflow generated from  
the business, we have major investment  
plans for 2016 and beyond with key new 
organic developments and bolt-on 
acquisitions. Importantly, we have also 
strengthened our management team,  
offering a forceful blend of experience, 
commercial wisdom and dedication to  
care. I have no doubt that the next few  
years will see continuing growth and  
care excellence which will help deliver  
our target of double digit underlying EPS 
growth going forward. 
Farouq Sheikh
Chairman
20 January 2016 
11 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements The Care market in which the Group 
operates is a UK market worth £15bn 
per annum across Adult Services  
for adults over the age of 18 and 
Children Services for children and 
young people up to the age of 18.
The Directors present their Strategic  
Report on the Group for the year ended 
30 September 2015. In preparing this report, 
the Directors have complied with S414C  
of the Companies Act 2006. The Strategic 
Report should be read in conjunction with  
the Strategic Review for the Group. 
Our Market
The principal driver for commissioners  
in local authorities and the NHS is value.  
This is interpreted by them as the optimum 
balance between quality and price but  
has an underpinning criterion determined  
by “outcomes”. CareTech has been aligned  
to this set of purchasing principals and we 
work closely with commissioners to ensure 
that we stay in tune with their approach 
to market management.
Most providers of social care have fewer  
than three services and this huge, fragmented 
range of providers dominates the market. 
However, the market has been steadily 
consolidating and a very small number of 
large “corporate” providers have emerged, 
with CareTech being one of the bigger  
players within the non-elderly care sector. 
Numerically the large providers will have  
a very small minority of the market  
capacity and all the evidence suggests  
that consolidation will continue, perhaps 
accelerating, during the foreseeable future.
Although the available resources to purchase 
social care remain largely static there is a 
known increase in demand across the whole 
spectrum, presenting purchasing bodies with 
a conundrum. One response has been to 
move money away from the NHS in order  
to allow local authorities greater purchasing 
power. However, the most significant change 
has been to a system of aggressive rationing. 
This has focused money on the areas of 
highest need such as complex children,  
very disabled or complex people with  
learning difficulties and hospital discharge 
schemes. This is where CareTech has 
developed its provision and helps to  
explain why spending cuts have had  
minimal impact on the Group.
Client focused innovative Care  
Pathway approach
Care and support is characterised by 
optimism and a genuine belief in the abilities 
of our service users. Everyone we support has 
an opportunity to make progress in their lives 
and our professional teams work hard to  
help those people understand how to  
move forward. Many years ago we began  
to describe our services as a Care Pathway, 
making clear our intention to break away  
from the old belief that care is for life. We 
have delivered on this commitment and 
everyone we support, from young children  
to profoundly disabled adults, shares our 
dream to maximise their independence.  
This is great for service users, rewarding for 
our staff and strongly supported by those 
who commission and sponsor our services.
Adult Services
Adult Learning Disabilities
 – Residential care
 – Independent supported living
 – Community support services
Children Services
Mental Health
 – Residential care
 – Independent supported living
 – Community outreach
Foster Care
 – Fostering
 – Family assessments in the home
Young People Residential Services
 – Residential care of children  
and young people
 – Education services for  
children and young people
Learning Services
 – Pre-employment programmes
 – Development programmes
 – Apprenticeships
12 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Report
Creating sustainable 
value in our markets 1.4m
people, of whom 85,000 in the 
UK cannot live independently
£5.9bn
value per annum of market for residential 
learning disabilities and supported living
5.5% pa
market growth rate
2.4%
of the UK population will be referred  
to a specialist psychiatric service
£14.4bn
value per annum of NHS/LA total spend 
on mental health 
5.5% pa
market growth rate
51,340
children are placed into foster care  
in England
£1.1bn
value of foster care market  
across England
1.5% pa
market growth rate
17,500
children in England are looked  
after outside foster care 
£1.0bn
value of residential children’s  
market across England
0.2% pa
market growth rate
510,000
apprenticeship starts
£1.6bn
apprenticeship budget
9.1% pa
market growth rate
* Data from Laing and Buisson 2013 report.
13 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements Learning
Services
Foster Care and
Family Services
Young People
Residential Services
Mental
Health
Adult Learning
Diculties
Care
Governance
Care
Pathway
Experienced
and committed
management
Strong
brand
Safeguarding
Committee
Extraordinary
days every day
National presence
Our Business Model represents  
how we aim to generate revenue 
and profit from our operations.
The Group aims to operate throughout 
mainland Britain in England, Wales and 
Scotland in partnership with local authorities 
and the NHS, facilitating the outsourcing 
process, driving value and removing risk.
During the period, the Group continued to 
develop and grow organically four existing 
operating divisions, which come under  
the two outcome-based sectors of Adult 
Services and Children Services. We have 
also expanded the Learning Services 
division through acquisition. The growth 
going forward is underpinned by the strong 
starting point that we have built carefully over 
the past few years. We continue to extend 
both our geographic coverage and our 
outcome-based Care Pathway range of 
services organically and through the purchase 
and sale of properties to meet the needs of 
our marketplace, specifically the requirement  
for greater acuity service provision. This 
ensures that CareTech is in a very strong 
position to address the demands of our 
evolving marketplace.
The key resources that we require to provide 
care are:
People to provide care
Staff and carers who have appropriate skills 
and qualities to look after children or adults 
in need of care and who remain fully trained.
People with skills to manage, train and 
support our people who provide care
Skilled staff to provide the management  
and training to our people who provide care.
Buildings, homes and land
The land and buildings to provide 
accommodation for residential services  
or supported living.
Financial resources
Financial stability to be able to employ 
the right staff and to provide the right land  
and buildings.
Our Business Model Our resources
14 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Report
continued
A strategy to drive  
future growth We shall continue to improve the 
quality and scope of our services, 
increase market share and grow 
shareholder value.
Our understanding of the social care market 
and our relationships with local authority 
commissioners is vital to this objective and we 
are confident in the strength of our position. 
We are sensitive to the complex financial 
position that local authorities are in and their 
need to have trusted business partners who 
can help them deliver statutory duties 
efficiently and with care.
Social care expertise
Employing numerous qualified and skilled 
care workers, foster carers, teachers and 
managers, the CareTech front line teams  
are supported by a wide range of high level 
professionals such as social workers, nurses, 
therapists, psychologists and a skilled Medical 
Director with oversight of all interventions.
High quality
The driver for social care is an organisation’s 
ability to deliver high quality care, with reliable 
outcomes at a fair price. We believe that the 
market has recognised that CareTech offers 
the best possible balance between quality 
and value and understands the need for 
progressive thinking and innovation to  
deliver ongoing results.
Nationwide locations
The CareTech strategy is to offer a strong 
national brand with local and regional service 
delivery points. This supports development  
of local relationships while offering the 
comfort and security of a well resourced  
and strong Group.
Excellent reputation
The CareTech brand is strong and our 
extensive relationships across the UK are 
robust. This is reinforced by our presence  
at major industry events where we have  
been reliable sponsors and commentators. 
The most effective way that we sustain our 
reputation is by delivering what we promise 
for the people we support and by treating  
our staff well.
High occupancy
CareTech services are in demand and 
occupancy has remained high despite  
fears of local authority austerity impacting 
referrals. What’s more, the nature of referrals 
in recent years has been toward the more 
complex end of the spectrum.
Continued growth
It is well known that demographic  
trends show growth in social care in  
the foreseeable future.
Shareholder value
CareTech has delivered sustainable and 
reliable growth since the day it listed.  
It has aimed to be a defensible stock  
even in difficult times and for some  
time has offered a good quality dividend 
policy. We have every reason to believe  
that growth will continue and the 
management team remains enthusiastic 
about the Group’s future.
Our strategy
15 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements £32.5m
2011
2012
2013
2014
2015
£30.7m
£26.4m
£24.9m
£23.2m
£18.3m
2011
2012
2013
2014
2015
£16.1m
£14.1m
£13.3m
£12.6m
31.79p
2011
2012
2013
2014
2015
31.01p
27.43p
26.47p
25.35p
£158.5m
2011
2012
2013
2014
2015
£166.1m
£168.5m
£131.2m
£127.3m
Our KPIs help to measure the 
Group’s performance against  
its strategy and objectives.
Underlying EBITDA
£18.3m
(2014: £16.1m)
Underlying profit after tax
31.79p
(2014: 31.01p)
Underlying diluted EPS
How this is calculated
Underlying diluted earnings per share is the underlying profit after 
tax (which is after adjusting for non underlying items which are 
not considered to impact the trading performance of the Group) 
divided by the weighted number of ordinary shares which are fully 
described in notes (10) and (11) to the Financial Statements.
Performance this year
The underlying diluted earnings per share has increased by  
0.78p at 2.5% year on year. This is the increase in underlying  
profit after tax partly offset by the increase of 10 million shares 
from the share placement during the year to give a growth in 
earnings per share.
£158.5m
(2014: £166.1m)
Net Debt
How this is calculated
Net Debt comprises the balance at the year end for cash and cash 
equivalents net of bank loans outstanding and finance lease and 
hire purchase contract monies outstanding and is fully described 
at the foot of the Consolidated Cash Flow Statement on page 44.
Performance this year
Bank debt at 30 September 2015 was £151.0m which is a 
reduction of £11.3m from 30 September 2014 of £162.3m with 
the reduction mainly due to some of the share placement monies 
remaining unspent at the year end. Finance leases at the year end 
were £7.5m (2014 £3.8m) with the increase due principally to the 
investment in 240 new home vehicles during the year. Net Debt  
in total reduced by £7.6m or 4.6% between 30 September 2014 
and 30 September 2015.
£32.5m
(2014: £30.7m)
How this is calculated
Underlying EBITDA is the Earnings before Interest, Tax, 
Depreciation and Amortisation for the year excluding non 
underlying items such as amortisation of intangible assets  
which are fully described in note (5) to the Financial Statements.
Performance this year
The underlying EBITDA has improved by £1.8m or 5.9% year  
on year. This reflects the organic growth achieved by the core 
business which has been in part reduced by the reconfiguration 
work on some properties and improved margin and acquisitions.
How this is calculated
Underlying profit after tax is the Group’s profit after provision for 
taxation excluding non underlying items such as amortisation of 
intangible assets after tax which are fully described in note (5) to 
the Financial Statements.
Performance this year
The underlying profit after tax has improved by £2m or 13.7% year 
on year. This reflects the improved underlying EBITDA and finance 
charges offset by an increased tax provision.
16 CareTech Holdings PLC Annual Report and Accounts 2015
Our key performance 
indicators
Strategic Report
continued 2,116
2011
2012
2013
2014
2015
2,074
2,116
2,116
2,056
93%
2011
2012
2013
2014
2015
92%
92%
92%
92%
86%
2011
2012
2013
2014
2015
86%
84%
86%
87%
2,116  
places
(2014: 2,074 places)
How this is calculated
The Group’s capacity is the total number of Adult Service and 
Children Service places that the Group is able to offer at that 
date. It is a total including residential care beds, independent 
supported living accommodation, community support service 
users and children that foster carers can currently look after.
Performance this year
Overall capacity has increased by 42 reflecting the net of 45 
additional beds now brought into capacity and 48 beds which 
increased Children’s residential capacity with the acquisition of 
Spark of Genius, 27 beds withdrawn for reconfiguration, five 
places less in small supported living packages and a reduction 
of 19 for carers not currently accepting children with 18 of 
these occurring in the first half year.
Spark of Genius also has capacity to provide education to  
144 children but this is not included in capacity.
Capacity
93%
(2014: 92%)
Mature Estate occupancy
86%
(2014: 86%)
Blended occupancy
How this is calculated
The Mature Estate occupancy is the total number of Adult  
and Children Service users placed in services that were open 
throughout the year.
Performance this year
The ratio has improved slightly to 93% and reflects the  
long length of stay that the majority of service users  
have in our services.
How this is calculated
Blended occupancy is the total number of Adult and Children 
Service users actually placed as a percentage of the Group’s 
total capacity and so reflects facilities undergoing development  
and reconfiguration.
Performance this year
The ratio has remained at 86% and reflects the additional beds 
in reconfigured services brought back into capacity and the 
reduction in fostering capacity where carers are unable to 
accept foster children currently.
17 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements Social care is a long-term contract with the 
public sector and is inherently free of risk so 
long as quality is maintained, outcomes are 
achieved and the price is right. However, social 
care does carry risks that will always be at the 
forefront of our minds. The most obvious  
risk is that a tragedy will occur and that the 
company will be held to blame. To date this 
has not occurred but we take the risk very 
seriously. Our principal risk management 
strategy is to ensure that our staff are recruited 
well, are trained and supervised properly  
and are subject to rigorous quality oversight.  
In addition, we know from experience that 
processes and documentation must be very 
carefully observed and constantly reviewed  
to ensure that it protects service users and 
provides the company with a defendable 
position in the case of tragedy.
These matters, along with general safeguarding, 
are subject to intense scrutiny by our in house 
compliance and quality teams and Board  
level oversight.
Managing risk and mitigating risk
Social care is not a high risk business 
proposition but there are several unique 
factors that could cause difficulties for the 
careless or casual provider. These centre on 
the way in which care and support is provided 
and the reliability of those front line staff who 
provide it. CareTech approaches these issues 
with considerable care and exceptional 
diligence, building in quality and training 
wherever it is required but also through  
its established scrutiny protocols and firm 
leadership. We care a great deal about what 
we do and have established a reputation for 
careful management of all those processes 
that could expose us to risk.
Our risks
All providers of health and social care are 
conscious of the need for management 
vigilance and the requirement to have a 
thorough commitment to delivering care  
that is safe and of a high quality. CareTech’s 
approach to quality and safe service delivery  
is characterised by a mixture of a dedicated 
compliance team carrying out regular audits  
of inspection and a commitment to building 
quality into everything we do.
The market for the provision of social care 
services continues to be dynamic, presenting 
both risks and opportunities. The overall 
number of people needing support will 
increase, and a smaller proportion of them  
will be placed into residential services. Those 
who do need a residential care solution will 
have more complex needs and are likely to 
require a wider range of services, including 
clinical and therapeutic support. Our 
operational management teams are already 
focusing on the delivery of high quality care. 
As we move forward this will become 
increasingly specialised with the benefit of 
professional qualified care co-ordinators  
who will prepare and direct personalised  
care plans within the services.
Most service users will be supported in their 
own homes through domiciliary care or in 
more formal supported living arrangements. 
This is a major growth area for care providers 
and CareTech already has a solid reputation for 
its high quality and flexible solutions. We are 
building this to a higher level and refining our 
organisational structure to build more rapidly 
on our successes to date.
 – Service offer and user needs 
We have to create and staff a service  
offering which matches the needs of the 
service user and can be communicated to 
commissioners so it is carefully recorded 
locally at every service in order to reduce 
the risk of service users moving to other 
service providers.
 – Quality and safety 
We have to provide and deliver safe care  
of a high quality and the Group utilises 
Perry Scott Nash to audit and report 
monthly on health and safety matters as 
well as all RIDDORS (Reporting of Injuries, 
Diseases and Dangerous Occurrences 
Regulations) so that all incidents are 
recorded and acted upon.
 – Service value 
The service offer has to be provided to meet 
the needs of the commissioners at a fair 
price and this is coming under increased 
scrutiny as commissioners regularly review 
value for money so the Group communicates 
frequently with its commissioners locally.
 – R epu t a t i o n 
The Group has to have a reputation for 
delivering a service that is good value  
and takes account of all risks. The Group 
maintains a Risk Register which includes  
all key risks, including reputational risk,  
and how they are mitigated though quality 
of service and good communication with 
service users and Local Authorities. 
 – Growth funding 
So that the Group can keep growing 
adequate funding has to be anticipated and 
put in place and the Group ensures that all 
of its facilities are monitored and reviewed 
regularly in particular during its budget and 
forecasting processes.
 – Manage debt 
The level of debt obtained to fund 
operations and ensure that growth can 
occur has to be carefully managed and  
the different forms of leasing and debt  
are reviewed quarterly when all of the 
covenants are also reviewed.
By order of the Board
Farouq Sheikh
Chairman
20 January 2016
Our principal risk management 
strategy is to ensure that our staff  
are recruited well, are trained and 
supervised properly and are subject 
to rigorous quality oversight.
18 CareTech Holdings PLC Annual Report and Accounts 2015
Principal risks and our 
strategic response
Strategic Report
continued Adult Services 
Adult Services 
Residential 
Care and 
Community 
Support
Mental Health 
and Specialist 
Services
Children 
Services
Young People 
Residential 
Services and 
Education
Learning 
Services
Foster Care
Corporate 
direction and 
support
Incorporates the Finance department, 
Human Resources, National Training  
Centre, Quality, Regulation and  
Compliance Treasury and I.T.
Business segments
Strategic Review Governance Financial Statements
19 CareTech Holdings PLC Annual Report and Accounts 2015 Overview
It gives me great pleasure to again report on  
a successful year that reflects the hard work 
of our management team, the enthusiasm  
of our staff and the support of our Board.
The Group has continued to build upon its 
solid foundations and remains in a strong 
position to continue as a leading provider  
of high quality specialist social care services  
in a large and growing UK market which 
remains fragmented.
The Group has continued to develop through 
organic growth and reconfigurations and  
with the two acquisitions in July 2015 and 
one acquisition in December 2015 it has 
made further encouraging progress during 
the year and has gained experienced 
management teams with proficient leaders. 
The new businesses have integrated and 
settled well, though our principal focus 
remains organic growth.
A key recent strategy has been the 
development of the Learning Services 
Division which has already had a positive 
impact on gaining new staff, their training and 
retention, and the addition of Dawn Hodge 
Associates has further improved this strategy.
Consolidation and creating  
new opportunities
CareTech remains at the forefront of social 
care outsourcing across both Children and 
Adult Services and in the year there has been 
a further increase in working closely with 
commissioners and regulators as the whole 
system is under stress from the changes that 
policy and financial pressure have brought.
National public policy continues to be  
a significant driver of local authority 
commissioning intentions and behaviour.  
For a number of years public policy  
has encouraged greater personalisation  
of health and social care for adults. 
Commissioners and leading providers  
are driving change that will mean offering 
people more choice and control over the 
care, treatment and support they receive 
while at the same time maintaining the  
quality and safety of those services.
Our care priorities drive successful outcomes 
for our service users and follow closely the 
guidance from central Government.
Our key focus for delivering quality services 
and positive outcomes is supported by the 
following key factors:
Communication 
 – We have open and frank dialogue  
with our service users, their families  
and social workers.
Independence
 – In our social care and health contracts  
we aim to help our clients to return to  
an ordinary life. It may be children who  
can return to their birth families or live 
independently. It may be adults who  
we can help on the pathway to recovery 
following a mental health breakdown or 
people with learning disability who we  
can support towards independent living.
Housing care and support 
 – We know that most people aspire to  
have a place of their own, employment  
and ongoing support. We have structured 
our services, developing new provision  
and creative partnerships with housing 
providers to enable these aspirations  
to be achieved whenever possible and  
we are tailoring training to assist young 
people and adults leaving our services  
to gain employment.
Self-directed support 
 – It is pivotal to Government policy that  
adults and children receiving social care  
are fully engaged in the support that they 
require. With some adults this extends  
to the provision of a cash sum enabling 
them to purchase their care and support 
directly. CareTech managers have been 
reviewing our systems and delivering 
training throughout the organisation to 
ensure that we are able to deliver the 
requirements of self-directed support.
Quality and dignity
 – CareTech has always delivered high  
quality care in exceptional premises. 
However, we have never been complacent 
about this and have undertaken many 
reviews to ensure that we deliver the right 
quality at an acceptable price. We have also 
learned a great deal from the experience  
of our NHS colleagues and developed a 
Dignity Test to ensure that our front line 
and administrative staff treat all our  
clients in ways that promote dignity.
Progress in the year
The year has seen continued progress as  
the Group concentrates on the introduction  
of innovative new services developed in 
partnership with local authority commissioners 
from within our existing portfolio of properties 
or through new properties either purchased  
or rented for service users.
At the end of July 2015 the Group acquired  
the share capital of Spark of Genius and shortly 
afterwards Dawn Hodge Associates so the 
progress has been a mixture of organic 
development and acquisitions.
Spark of Genius is a Scottish-based provider  
of residential care and education services  
for young people with complex needs.  
Dawn Hodge Associates is an Ofsted Grade 1 
care sector apprenticeship training provider 
based in the North West.
Haroon Sheikh 
Chief Executive Officer
20 CareTech Holdings PLC Annual Report and Accounts 2015
An improved Foundation  
for Growth
Chief Executive’s Statement 
and Performance Review There have been a small number of asset 
disposals during the year where the service 
was not meeting commissioner aspirations 
and a reconfiguration was not possible or 
economically viable.
Our Adult Services have added 35 beds in  
the year, being 13 in Supported Living and  
22 in Residential.
Children Services have added ten beds in  
the year in two services with six beds and  
four beds.
The Group also continues to realise the 
benefit of organisational improvements  
that were put in place over the past few  
years. We have continued to strengthen  
the management structure and improve  
the efficiency of our processes following 
further investment in new systems which 
have gone live in the year such as the Time 
and Attendance system. We are seeing the 
benefits of new executive appointments  
and the Clinical Director role continues to 
have a positive impact across the services.
These improvements have put us in a  
strong position to benefit from a number  
of the commissioning opportunities by 
working in partnership with the NHS and  
Local Authorities.
Care Pathway range and services
The Group’s focus remains the provision of 
specialist social care. This is underpinned by 
a well-defined range of provisions which meet 
all of the commissioner requirements. These 
services are now even more extensive and 
focused on providing high quality care and 
positive outcomes for all of our service users.
The Group continued to develop and grow  
its existing four operating divisions, which 
come under the two outcome-based sectors 
of Adult services and Children services.  
We continue to extend both our geographic 
coverage and our outcome-based Care 
Pathway range of services organically and 
through the purchase and sale of properties 
to meet the needs of our marketplace, 
specifically the requirement for greater acuity 
service provision. This ensures that CareTech 
is in a very strong position to address the 
demands of our evolving marketplace.
Following the acquisition of our second Learning 
Services division business, I am particularly 
delighted to report on the integration and 
development of our apprenticeship model. The 
team has already completed pioneering work by 
developing the apprenticeship model in social 
care, and the CareTech Aspire Programme which 
takes CareTech’s care staff from the foundations 
of mandatory and statutory training to offer the 
opportunity to complete a Level 2 or Level 3 
apprenticeship. At the year end, this programme 
had 460 CareTech apprentices undertaking  
the apprenticeship and has significant growth 
potential both within the Group and across  
the wider social care sector.
We remain committed to the growth of 
residential care solutions for adults and 
children with the most complex needs  
and the CareTech Group has embraced  
the development of home-based solutions 
including foster care where demand for  
more specialist services remain strong.  
Our residential care services for children  
cater for young people with particularly 
difficult issues and offer a national service; 
with strong growth seen in Scotland including 
the addition of Spark of Genius which also 
has properties in the North East of England 
and Roc North West, which has care and 
educational services in the North West of 
England. Our adult services offer a solid and 
reliable provision across the whole spectrum 
of service offerings and we see a particular 
volume demand in the area of supported 
living, balanced by renewed demand for  
more specialised residential care solutions.
Our strategy is to offer a bespoke range  
of options so that we can maintain the  
Care Pathways that distinguish us from  
other providers.
A holiday to Disneyland has been a dream of some 
of our residents at Ashview House for a long time.
Staff were amazing and made sure the residents  
had a great holiday.
21 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements This includes adult residential care homes, 
independent supported living and community 
support services.
The principal reason for the increase 
in underlying EBITDA of £1.9m was the 
reconfiguration of homes from Mental Health 
and their reopening late in the overall year 
which improved the underlying EBITDA margin 
from 30.5% to 32.3%.
We have continued to work closely with 
commissioners and this has helped us to 
achieve our growth through the past year. We 
take a long-term view, recognising that change 
will continue and with this in mind I am pleased 
to report that the closure and redevelopment of 
some of our long stay residential provision has 
been a great success over the past year and will 
continue to meet the changing requirements  
of commissioners and families.
The market for high acuity care and the 
support of people with learning disability is 
growing year on year. Demand for low-level 
support has been impacted by the cuts in  
local authority expenditure but this is not an 
area of activity in which CareTech operates. 
Conversely, resources for those with the 
highest level of need are being maintained  
and increased in some local authorities.
During the past year we have developed  
35 beds through reconfiguration of existing 
residential services. Further new provision  
is under development.
Mental Health 
Revenue £6.4m (2014: £7.3m)
Underlying EBITDA £1.9m (2014: £2.5m)
Capacity 114 (2014: 151)
The reduction in capacity and revenue in 
Mental Health arises because there have  
been a number of services reconfigured 
and transferred to Adult Learning Disabilities.
Mental Health works in partnerships with  
the NHS to ensure a successful transition  
out of acute care, delivering pathways to 
independence. We have an outstanding track 
record for helping people away from acute 
care and supporting them in their own homes.
The adult services for this Care Pathway include 
a community-based hospital, adult residential 
care homes, independent supported living and 
community outreach with some transitional 
services transferred within the Group.
Overview of progress
Our focus during the past year has continued 
to be further building on the businesses 
which established the Care Pathways whilst 
introducing innovative new solutions to meet 
the challenges faced by care commissioners 
and then adding newly acquired businesses 
with complementary skills.
Capacity has increased by 42 places 
principally because we have continued to 
reconfigure services and acquired Spark of 
Genius. Occupancy levels within our mature 
services remain at a creditable 93%, or 86% 
when taking into account our services under 
development and transition; there is a 1% 
improvement on the previous year for the 
mature services.
Much has been written about personalisation 
and I felt it would be useful to set out our  
own understanding and commitment  
to personalisation.
Personalisation means “recognising people  
as individuals who have strengths and 
preferences and putting them at the centre  
of their own care and support” (Social Care 
Institute of Excellence).
The traditional service-led approach has  
often meant that people have not been able 
to shape the kind of support they need, or 
receive the right kind of help. Personalised 
approaches such as self-directed support and 
personal budgets involve enabling people to 
identify their own needs and make choices 
about how and when they are supported  
to live their lives. 
Our two business divisions of Adult Services 
and Children Services comprise the following 
five care pathways:
Adult Learning Disabilities 
Revenue £75.7m (2014: £74.2m)
Underlying EBITDA £24.5m (2014: £22.6m)
Capacity 1,496 (2014: 1,450)
Adult Learning Disabilities provides individually 
tailor-made solutions for people living in their 
own homes, residential care or independent 
supported living schemes. We can work with 
clients to deliver self-directed support packages.
For some people residential care will continue 
as the preferred option and we increasingly 
offer several types of supported living and 
packages of individualised self-directed 
support to people in their own homes.
Community Mental Health has always been 
a critical but relatively neglected area of social 
care. However, this is changing as the NHS drives 
to lower bed capacity and accelerated early 
discharge from acute psychiatric hospital care. 
The growth of social care is certain and the 
response by Government to one of the key 
difficulties is progressing. There has been 
some progress in the removal of large 
numbers of learning disabled people from  
the controversial ‘Treatment and Assessment 
Centres’ operating at various locations 
throughout the UK. CareTech has never 
operated any centres of this type but we 
understand that the CEO of NHS England has 
been tasked with ensuring that these centres 
are re-provided as a matter of urgency. 
CareTech is seeking opportunities to support 
the project and to offer a comprehensive 
solution within its community homes.
We are well positioned for further expansion 
in Mental Health and have a sustainable 
infrastructure to deliver growth. 
Foster Care 
Revenue £9.8m (2014: £12.0m)
Underlying EBITDA £2.4m (2014: £3.0m)
Capacity 301 (2014: 320)
Foster Care provide for both mainstream  
and specialist foster care in small supportive 
Groups across England and Wales for children 
with disabilities. We also provide foster care 
family assessments in the home rather than  
in a residential setting.
The reduction in capacity, revenue and 
underlying EBITDA in Foster Care arises due to 
the competitive nature of the market as well as 
because of the change to family assessments 
in the home and also due to capacity being 
reported on the new basis of children that 
carers are able to look after rather than the 
number they are approved for.
This trend is driven by cost considerations, 
where fostering is considerably less expensive 
than residential care and by perceived quality 
care factors. It is generally held that fostering in 
an ordinary family home delivers better quality 
than any residential setting. However, the rising 
tide of fostering has been constrained by the 
challenge of finding foster carers with the right 
skill and motivation alongside preference by 
social workers to place within local authority 
services rather than the independent sector.
22 CareTech Holdings PLC Annual Report and Accounts 2015
Chief Executive’s Statement 
and Performance Review
continued In 2013, 46% of children placed in foster homes 
were outsourced to the independent sector. 
This compares with 67% placed in residential 
homes operated by independent providers.
Our Foster Care teams and Young People 
Residential teams are working alongside  
each other to offer the best outcomes for 
young people.
Our market intelligence suggests that most, if 
not all, independent sector fostering agencies 
are experiencing some degree of “hold back” 
at present. However, the consensus view is 
that this will not last long and local authorities 
will inevitably return to progressive outsourcing 
of foster care provision.
Outsourcing is well established in the culture 
of most local authorities, but the current 
austerity measures have led a small number of 
authorities to reflect on the 50% fee premium 
paid for independent fostering. This disparity  
of cost can be attributed in part to the fact  
that the most complex and therefore most 
expensive children are placed in the care of 
independent providers. However, it is also  
clear that local authorities fail to undertake a 
full cost analysis of their in-house provision. 
Wherever this has been done, outsourcing  
is demonstrably much better value.
Demand for foster care has increased overall but 
we have noted an increasing trend among some 
local authorities to make provision in-house for 
all but the most complex children. In our view 
this is an expensive and unsustainable approach 
that exposes local authority commissioners to 
risk. Our own services are being maintained at  
an acceptable level. Looking forward we are 
training our foster carers with the skills required 
to manage more complex work and have 
linked the fostering division with our residential 
team for children so that we can maintain an 
effective care pathway.
Young People Residential Services 
Revenue £22.4m (2014: £21.9m)
Underlying EBITDA £8.2m (2014: £7.4m)
Capacity 205 (2014: 153)
A number of children and young people need 
to live in specialised residential services and 
receive education. As far as practicable we  
aim to help these children move into a more 
normalised family style environment.
This segment contains children residential  
care homes, which includes facilities for 
children with learning difficulties and 
emotional behavioural disorders (“EBD”),  
and small specialist schools.
In the year this segment benefited from two  
new services which have added 10 beds.  
We also acquired Spark of Genius which will 
provide significant benefits across the divisions 
due to their well established education facilities 
across Scotland and North East England.
Children residential services have been growing 
as our reputation for quality care and support 
spreads. We are currently developing new beds 
and places that have been commissioned 
during the past year. 
Learning Services 
Revenue £10.0m (2014:£7.9m) 
Underlying EBITDA £0.9m (2014:£0.1m)
CareTech acquired EQL Solutions in November 
2013 and is a national provider specialising in 
employment and training services to young 
people and adults. The necessary investment 
and re-structuring is now complete.
Its intensive pre-employment, development  
and apprenticeship programmes use public 
funds from the Skills Funding Agency to lay the 
foundations for individuals to achieve their career 
goals while helping to provide businesses with 
the vital skills they need in their workforce.
As well as supporting the workforce, EQL 
Solutions has also developed programmes for 
service users by enhancing the pathways to 
independent living and employment. Young 
people leaving care, for example, often do not 
know where to find the right job opportunities 
or have the opportunity to access employer-
focused training. We can now bridge that gap 
by supporting young people as they make the 
transition to adult life. We are also exploring 
how best to help individuals return to 
employment after mental illness and to give 
people with learning disabilities the skills and 
confidence to gain employment so that they 
are able to live more independently.
Early mapping with CareTech’s core business 
has gone well. Good progress has been made 
in identifying the potential for EQL Solutions  
to add value to CareTech’s attraction and 
recruitment of staff and their retention, helping 
new employees gain the skills and qualifications 
to grow a successful career in care through  
an Apprenticeship.
Kathryn Graham lives in a CareTech service and attends 
the Martello Centre. Kathryn works for CareTech for 2 
half days a week, helping make the centre user friendly 
by producing signage in Makaton symbols. Kathryn has 
worked for our training department for six years and at 
the Martello Centre for three years.
“Foster care is on a rising 
trend in terms of both 
numbers placed in foster 
care and expenditure by 
local authorities.”
Laing and Buisson, 
2013
23 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements An Apprenticeship is a work-based learning 
programme designed around the needs  
of employers, which leads to nationally 
recognised qualifications. It is available to 
anyone aged 16 and above and is made  
up of a practical competency component, 
on-the-job training and off-the-job learning. 
As well as Apprenticeships being a practical, 
cost-effective way to recruit and train new 
social care employees, many employers 
consider the framework to be a useful 
learning and development route for  
their current employees, across all  
ages and experiences.
For some time the Group has felt that the 
ability to offer pre-employment training to 
potential recruits, alongside Apprenticeships 
and other development solutions for existing 
employees, would enhance and support 
many aspects of CareTech’s outcome-based 
approach. We are delighted that the learning 
and development specialists in EQL Solutions 
are now working with all of the care divisions 
to continuously improve the standards of care 
and delivery across all our services. We look 
forward to collaborating with our partners to 
spread best practice and innovative training 
across the wider social care sector.
I am pleased to confirm that we have made 
good progress with EQL Solutions and the 
team are strongly motivated to develop their 
initiatives in the world of social care through 
the Aspire Programme.
Aspire has been developed by EQL Solutions 
as a unique and innovative scheme that  
will ensure all CareTech’s support workers 
receive mandatory and statutory training  
to the highest standard whilst also being 
offered the opportunity to complete a  
Level 2 or Level 3 Apprenticeship which  
has been carefully tailored to suit their role.
CareTech apprentices have now begun their 
training with 460 CareTech support workers 
undertaking the apprenticeship programme.
Dawn Hodge Associates was acquired due  
to its Ofsted Grade 1 and experience of  
the social care sector. The services of EQL 
Solutions and Dawn Hodge Associates 
complement each other and provide the 
foundations for a strong learning division 
within the Group. 
Corporate Social Responsibility 
We have continued to strive for long-lasting 
improvements in our services in a way  
that is consistent with the interests and 
concerns of our stakeholder community.  
As always, the driving force underpinning 
CareTech’s whole operation continues  
to be the provision of the highest quality  
of care to our service users.
We care about our service users
Service users are the reason for our  
existence and satisfying their needs  
remains our key objective.
As our organisation grows, we strive to 
maintain a culture which never forgets the 
important relationship we have with our 
service users. We seek to nurture these 
relationships and see them as partnerships  
of mutual interest and respect, with our 
person-centred approach ensuring service 
user interests are safeguarded and 
vulnerabilities minimised.
The further expansion of our Care Pathway 
strategy seeks to provide our service users 
with “whole of life” solutions to their needs, 
maximising independence where possible  
by encouraging education, promoting  
choice, being proactive with family relations, 
providing employment where feasible and 
nurturing personal ambition where helpful. 
In the year we have been celebrating the 
achievements of our service users across  
the country, they have been busy creating  
art pieces for an Art Competition and the 
finalists are having an awards presentation  
in early December 2015.
We are determined to preserve the dignity  
of those we care for and fully support 
Government initiatives to this end. We see 
making each day as fulfilled as possible  
for our service users as a vital ingredient  
to their, and our, success.
We care about the environment
We seek to maximise environmental 
standards in all areas of our organisation. 
Energy costs are now more closely monitored 
centrally and with the installation of  
smart meters being rolled out across  
our services we are seeking to encourage 
more efficient consumption of energy, 
without compromising service user care.
Clinical waste management has an 
environmental impact and we are focused  
on ways to make this more effective whilst 
still adhering to statutory requirements.
Dawn Hodge Associates, purchased by CareTech 
in July 2015. A training company which is Ofsted 
Grade 1 Approved.
24 CareTech Holdings PLC Annual Report and Accounts 2015
Chief Executive’s Statement 
and Performance Review
continued We aim for minimal waste production and 
waste-free processes. Encouraging the 
involvement of our workforce in seeking new 
ways to “be green” is important and we are 
striving to reduce our carbon footprint in all 
commercial areas including promoting recycling 
initiatives, developing a carbon offset scheme 
for paper usage, using public transport where 
feasible and improving our energy efficiency.
We care about our staff
We remain committed to ensuring employees 
share in the success of the Group and fully 
appreciate that Group performance is affected 
by the relationship we have with them.
Sustaining the retention and development  
of employees is also critical to our continued 
success and we remain of the belief that 
fostering a positive workplace culture is  
the best way for our employees to thrive. 
Supporting them with regular supervision, 
training and clear career development 
programmes promotes staff continuity and 
leads to improved standards of care quality.
In early December 2015 we are having a staff 
awards ceremony with ten categories for staff 
and staff teams across each Division for the 
2015 Awards. It is planned to hold a similar 
event in 2016.
Out of a total of 3,739 staff at the end of 
September 2015 68% are female and equal 
opportunity for all remains at the heart of our 
recruitment policies and the diversity of our 
workforce bears this out. We value our staff at 
all levels and work closely with them through 
our robust human resources department to 
foster consultation in all matters, ensure fair 
pay for all, maximise conditions of service  
and facilitate flexible working where feasible.
During the year we undertook a Staff 
Engagement Survey which involved all staff 
and looked at values and questions across  
five engagement drivers. The feedback has 
led to a Communication Plan that will lead to 
improved communication across the Group.
We have a team of in-house training staff 
delivering courses on all relevant subjects, 
enabling our workforce to gain the skills, 
knowledge and confidence to provide the 
care and support to our service users on  
a daily basis.
Our sharesave share option scheme is being 
re-launched to offer new invitations regularly 
and will be available to all our employees.  
This participation, along with regular senior 
management share option awards, contributes 
to the fulfilment of our desire to reward staff 
for loyalty, diligence and effort.
We care about quality and safety
As a Group, our aim is to provide a safe working 
environment for service users, staff and visitors. 
We value the well-being of all stakeholders  
and develop policies to this end.
Maintaining workplace infrastructures is a 
core objective and sustained investment in 
Information Technology, furniture, facilities 
and equipment enable working environments, 
be they operational or administrative, to be 
safe and productive.
Regulation is vigorously applied with routine 
and regular inspections being made by the 
Care Quality Commission (“CQC”) and Ofsted 
in England and the services are regulated by 
the Care and Social Services Inspectorate 
Wales (CSSIW) in Wales and by the Care 
Inspectorate for Scotland.
We continue to resource our own highly 
experienced internal quality and compliance 
teams which undertake a programme of 
regular inspection and assessment and give 
constructive feedback backed by training  
and supervision if the requirement is there. 
We engage the services of outsourced  
expert advisers ensuring best practice  
and procedures are maintained.
We care about our communities
Doing business the right way is of 
fundamental importance to us. A successful 
business needs to operate in healthy, thriving 
communities and needs to be seen as a good 
neighbour to those communities.
We have direct involvement in a variety  
of community-based programmes further 
improving our service reputation and helping 
to foster a strengthened relationship with 
local authorities.
Being a socially responsible organisation  
with a focus on developing our ethical 
standards aligned with our economic 
objectives remains a core aim and we strive  
to identify the real value of our organisation, 
beyond its bottom line. Considering non-
financial values such as reputation, employee 
commitment and service user fulfilment  
helps us see longer-term opportunities and 
risks, ultimately saving money and time.
Behaving responsibly and maximising  
the benefits of a strong relationship with  
our stakeholders is an integral part of  
a continuing process of building  
long-term value.
Outlook
The coming year shows every sign of being 
good for health and social care providers  
and especially for those with an established 
reputation for quality and innovation. 
Since the 2015 General Election there has 
been significant policy development in the 
pipeline and we see some indicators that 
local authorities have recognised the need to 
maintain, or grow their social care budgets.
In our view we are in a period in which 
consolidation will again feature strongly 
within the corporate sector and we are  
alert to quality opportunities that may arise. 
However, we are mindful about acquisition 
and have robust criteria which must be 
satisfied to ensure that any acquired company 
fits our strategic development objectives.
This has been another progressive year for 
CareTech and I am indebted to the strong 
management team who have managed the 
services in what has been a challenging 
environment for the care sector. 
CareTech provides high quality care, support 
and outcomes to our service users. I remain 
proud to lead the Group, delivering a quality 
of care that makes such a difference to so 
many lives.
Haroon Sheikh
Chief Executive Officer
20 January 2016
25 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements Results
The underlying operating profit remains 
strong at £28.8m compared with £27.3m  
last year. Up to 2013 the Group had been 
making strategic acquisitions to gain market 
share and extend the care pathway range of 
services. Since 2013 the focus has been on 
organic development and cost efficiencies, 
but with the Share Placement, improved 
banking facilities, the Group (following  
the acquisition of Spark of Genius Limited  
and Dawn Hodge Associates Limited) 
continues to be well placed to make  
further acquisitions.
Underlying diluted earnings per share 
increased by 2.5% to 31.79p (2014: 31.01p)  
per share and underlying profit after tax  
has risen by 13.7% to £18.3m (2014: £16.1m).  
Basic and diluted earnings per share 
decreased by 42% to 13.80p and 13.80p 
respectively (2014: 23.86p basic and 23.85p 
diluted) and profit after tax decreased by  
35% to £8.0m (2014: £12.4m).
Cash inflows from operating activities  
before tax and non underlying items paid 
were £30.8m (2014: £30.3m), an increase  
of 1.3%. Net debt at the year end of £158.5m 
has reduced by £7.6m for the year.
The Condensed Income Statement before 
non underlying items for the year is summarised 
in table 1 opposite.
Revenue
Revenue of £124.3m (2014: £123.3m) was 
0.8% higher than in 2014. 
In the established Adult Learning Disabilities 
segment we continued to experience high 
levels of occupancy and reported 93% 
occupancy at 30 September 2015. When this 
is blended with the facilities that are being 
reconfigured and so are under development, 
the overall occupancy level during the second 
half of the year and at 30 September 2015 
was 86% of capacity (September 2014: 86%). 
As in recent years the demand for residential 
services continues to be encouraging for  
high acuity users.
Michael Hill 
Group Finance Director
Table 1 – Condensed Income Statement before non underlying items 
2015
£m
2014
£m Growth
Revenue 124.3 123.3 0.8%
Gross profit 47.7 46.6
Administrative expenses (15.2) (15.9)
Underlying EBITDA 32.5 30.7 5.9%
Underlying EBITDA margin 26.1% 24.9%
Depreciation (3.6) (3.4)
Share-based payments charge (0.1) (0.1)
Underlying operating profit 28.8 27.3 5.5%
Net financial expenses (6.8) (7.5)
Underlying profit before tax 22.0 19.7
Taxation (3.6) (3.6)
Effective tax rate 16.4% 18.2%
Underlying profit for the year 18.4 16.1
Weighted average number of diluted shares (millions) 57.7 52.0
Underlying diluted earnings per share 31.79 31.01
Full year dividend per share 8.40p 8.00p
Table 2 – Revenue
2015
Revenue
£m
2015
Underlying
EBITDA
£m
2014
Revenue
£m
2014
Underlying
EBITDA
£m
Adult Learning Difficulties 75.7 24.5 74.2 22.6
Mental Health 6.4 1.9 7.3 2.5
Adult Residential Services 82.1 26.4 81.5 25.1
Young People Residential Services 22.4 8.2 21.9 7.4
Foster Care 9.8 2.4 12.0 3.0
Learning Services 10.0 0.9 7.9 0.1
Children’s Services 42.2 11.5 41.8 10.5
Less unallocated Group costs 124.3 37.9 123.3 35.6
– (5.4) – (4.9)
124.3 32.5 123.3 30.7
26 CareTech Holdings PLC Annual Report and Accounts 2015
Financial Review
The Group has a platform for  
further Acquisitions and Growth Children’s Home in Wales.
As set out in the Chief Executive’s statement 
and note 4 to the Accounts, we are again 
reporting segmental information for the 
financial year and last year which includes 
information on client capacity and revenue 
for each segment with the addition of 
Learning Services last year.
The continued development of our care 
pathways and a growing range of service 
options has led to the proportion of Adult 
Learning Disabilities revenue moving from 
60.2% in 2014 to 60.9% in 2015 and EBITDA 
before Group costs from 63.5% in 2014 to 
64.6% in 2015.
The Young People Residential services total 
revenue has risen by 2.3% with Mental Health 
falling by 12.3%, Foster Care falling by 18.3% 
and Learning Services rising by 26.6%. Their 
total proportion of the EBITDA before Group 
costs has come down from 36.5% in 2014  
to 35.4% in 2015 due mainly to the higher 
margin generated by the Adult Learning 
Disabilities Division Services.
Underlying EBITDA and total EBITDA
Underlying EBITDA has grown by 5.9% from 
£30.7m in 2014 to £32.5m in 2015. Underlying 
EBITDA margin has increased from 24.9% to 
26.1% mainly due to the higher rate of margin 
in the Adult Learning Disabilities Services.
The Adult Learning Disabilities, Mental Health 
and Young People Residential Services 
segments have higher margins but normally 
require considerable capital expenditure to 
increase capacity, whilst Foster Care operates  
at a lower margin in part because it does not 
require capital expenditure to increase capacity.
Administrative expenses, before depreciation 
and share-based payments charges were 
£15.2m (2014: £15.9m) and decreased by £0.7m 
during the year. In 2014 they represented 12.9% 
of Group revenue and in 2015 this further 
improved to 12.2% of Group revenue.
There has been a considerable effort in the 
year to reduce administrative expenses with 
further back office systems centralisation  
and procurement successes for the Group.
The reconfiguration of services is a central  
part of the Board’s strategy to grow organically. 
It enhances average fee rates and maintains  
the Group’s reputation as a provider of highest 
quality of care. 
The number of employees in management 
and administration has increased by 21.  
The Time and Attendance system has been 
implemented across all of the residential 
services in the year which will further our 
back office centralisation and ensure that  
staff are paid more accurately and quickly,  
as well as giving reliable data on staff rotas 
and attendance in each service.
Total EBITDA has decreased from £28.3m  
in 2014 to £26.8m in 2015.
Operating profit and profit before tax
The depreciation charge is £3.6m  
(2014: £3.4m) and reflects the investment  
in land and buildings, motor vehicles and 
fixtures, fittings and equipment.
After this charge and the share-based 
payments, underlying operating profit  
grew 5.5% to £28.8m (2014: £27.3m).
Total operating profit decreased by 13.2%  
to £17.8m (2014: £20.5m).
Net underlying financial expenses of  
£6.8m (2014: £7.5m) decreased over the 
previous year due to the effects of the share 
placement monies and the new banking 
facilities, although there were additional 
finance leases taken out on new home 
vehicles during the year.
Underlying profit before tax was £22.0m 
(2014: £19.7m) which is an increase of 11.7%.
Total profit before tax decreased by 24.8%  
to £9.4m (2014: £12.5m).
27 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements Taxation and diluted earnings 
per share
The effective underlying tax rate was 16.4% 
(2014: 18.2%) and reflects management’s 
expectations of future capital investment 
through organic developments and 
reconfigurations relative to available capital 
allowances and also reflects the impact  
of the reduction in the main rate of 
corporation tax in the year.
The weighted number of shares in issue  
rose by 11% due to the share placement  
whilst the underlying diluted earnings per 
share rose to 31.79p in 2015 from 31.01p  
in 2014.
Basic and diluted earnings per share 
decreased by 42.2% to 13.80p and  
13.80p respectively (2014: 23.86p  
basic and 23.85p diluted).
Dividends
Our policy has been to increase the total 
dividend per year broadly in line with the 
movement in underlying diluted earnings  
per share. The final dividend will therefore 
increase to 5.60p per share (2014: 5.40p), 
bringing the total dividend for the year  
to 8.40p (2014: 8.00p), a growth of 5.0%. 
Dividend cover for 2015, based upon diluted 
earnings per share before non underlying 
items is 3.78 times (2014: 3.87 times).
Non underlying items
As more fully explained on the face of the 
Consolidated Statement of Comprehensive 
Income and in note 5 to the Accounts,  
the Directors have separately disclosed a 
number of non underlying items in order  
to improve understanding of the underlying 
trading performance achieved by the Group. 
Total non underlying items represent a  
charge of £10.9m (2014: £6.8m) and the 
principal items are the amortisation of 
intangible assets and integration and 
reorganisation costs plus costs associated 
with the new banking facilities.
Cashflow and net debt
The cashflow statement and movement in  
net debt for the year is summarised below:
Net debt at 30 September 2015 of £158.5m 
(2014: £166.1m) has decreased by £7.6m 
during the financial year, with an investment 
of £16.6m in acquisitions and capital 
improvements during the year.
2015
£m
2014
£m
Underlying EBITDA 32.5 30.7
(Increase) in working capital (1.7) (0.2)
Cash inflows from operating activities 30.8 30.5
Tax paid (1.3) (0.3)
Interest paid (6.7) (7.1)
Dividends paid (4.2) (2.4)
Acquisitions and capital expenditure (16.6) (10.3)
Share placement 19.8 –
Cashflow before adjustments 21.8 10.4
Non underlying cashflows including derivative financial instruments (14.2) (8.0)
Movement in net debt 7.6 2.4
Opening net debt (166.1) (168.5)
Closing net debt (158.5) (166.1)
Non underlying items had a cash outflow 
effect of £14.2m (2014: £8.0m) being 
payment of acquisition and integration  
costs and payments made under  
onerous contracts.
Underlying cash inflows from  
operating activities
The £30.8m (2014: £30.3m) cash inflow from 
operating activities, before non underlying 
items, represents a 95% (2014: 98%) 
underlying EBITDA cash conversion ratio.
Interest and dividend cashflows
Interest paid of £6.7m (2014: £7.1m) is 
reflective of the net financial expenses per the 
Consolidated Statement of Comprehensive 
Income, whilst dividends paid are consistent 
with the relevant section earlier in the review.
28 CareTech Holdings PLC Annual Report and Accounts 2015
Financial Review
continued Share placement
The Group raised Gross Funds of £21m 
through a placing of 10,000,000 shares  
at a price of £2.10 pence per share in  
March 2015. Existing shareholders and new 
shareholders plus the management team 
subscribed to the placing. The intention is to 
use the placing proceeds would be deployed 
on acquisitions within approximately 12 
months of the issue.
Acquisitions and capital expenditure
During the year we invested total funds of 
£16.6m (2014: £10.3m). The Group acquired 
Spark of Genius for a total consideration  
which may rise to £9.23m comprising an 
initial payment of £7.48m in cash and an  
earn out of up to £1.75m.
It also acquired Dawn Hodge Associates  
for an aggregate consideration of £1.1m.  
After the year end we acquired Roc North 
West Limited for a total consideration of 
£11.425m, which utilises the whole of the 
placement proceeds.
Further details of the acquisition are  
explained in the Chief Executive’s Statement 
and Performance Review as well as in the 
notes to the financial statements.
Capital expenditure of £9.9m includes  
£6.0m to update our portfolio of assets.
Banking arrangements
The Group is pleased to have continued  
its strong relationships with Royal Bank  
of Scotland, Lloyds Bank, Santander and  
Allied Irish following the last refinancing  
in July 2012. In July 2015, the Group agreed 
improvements to its banking facilities.  
The previous facility was due to expire  
in January 2017 and this has now been 
extended to January 2019. The cost of 
borrowing has been reduced through  
a reduction to the interest rate and four  
loan repayments, which were due between 
2015 and October 2016 amounting to 
£21.6m, have been deferred. In addition, 
there is a new uncommitted accordion  
facility of up to £30m which, together  
with the deferral of loan repayments  
gives further support to the Group’s 
acquisition strategy.
As part of the additional financing the  
Group’s current freehold property portfolio 
was valued independently at £294m in 
October 2015. 
At 30 September 2015 the Group has  
available bank facilities totalling £195m which 
are sufficient, with cashflow from operating 
activities, to fund present commitments.
Outlook
The Group is now in an even stronger 
position to continue as a pioneering  
provider of specialist social care services  
in a fragmented, large and growing  
UK market.
Michael Hill
Group Finance Director
20 January 2016
29 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements Farouq Sheikh has been a key architect in 
CareTech’s growth, having been co-founder  
of the Group and involved in the vision and 
strategy from the outset in 1993. With a 
background in law and a good understanding 
of finance and commerce, Farouq has been 
instrumental in securing debt and equity 
funding for the Group as well as leading the 
management team in winning a number  
of long-term contracts from local and  
health authorities.
Farouq is a leading business entrepreneur, 
philanthropist and investor within the UK. 
Farouq has initiated and overseen the 
successful equity investments and the 
subsequent exits for 3i Group PLC (in 1996  
and 2002) and Barclays Private Equity  
(in 2002 and 2005). His intimate knowledge  
of the marketplace, and his commercial and 
negotiating expertise assisted in the Group’s 
growth. Under his stewardship, CareTech’s 
earnings per share has grown significantly  
from 4.1p in 2005 to 31.31p in the current 
financial year.
Farouq has been presented with a number of 
Entrepreneur of the Year awards by prestigious 
organisations including Laing and Buisson, 
Coutts Bank and Ernst & Young. He also presents 
widely at healthcare conferences, raising 
awareness of the learning disability sector.
As Patron and Enterprise Fellow of the 
prestigious Prince’s Trust and as a member  
of the Mosaic National Advisory Board,  
Farouq supports young people by passing  
on his experience and expertise to inspire  
the next generation of entrepreneurs.
Haroon Sheikh, a London University graduate, 
is one of the UK’s leading entrepreneurs, 
philanthropists and community figureheads 
and one of the founders of CareTech. Haroon 
brings commercial acumen, related industry 
experience and property knowledge which 
has been essential in the growth of the 
business. As Chief Executive Officer, he is 
actively involved in the day-to-day running  
of the business and over time has been 
instrumental in nurturing and supporting the 
senior management team, which comprises 
disciplines in care, commerce and property. 
He has a deep commitment and passion to 
delivering high-quality care and support to 
people with a learning disability. 
In 2008, Haroon and his brother Farouq were 
winners of the highly valued Coutts Family 
Business Prize and widely applauded for the 
quality and social integrity of the company 
they created.
Haroon is Patron and Enterprise Fellow of the 
Prince’s Trust and is also Vice Chair of the UK 
Advisory Council of the British Asian Trust 
under the patronage of HRH Prince Charles.
Haroon’s most recent social enterprise  
was establishing the COSARAF Charitable 
Foundation to benefit communities and 
individuals in the UK and abroad. As trustee 
for International Development, Haroon 
established the COSARAF Kenya Feeding 
Project which supports the feeding of over 
700 women and children daily as well as 
supporting the drilling of boreholes in  
various rural villages.
Michael qualified as a chartered accountant  
with Deloitte in 1975 and then did an MBA 
before joining Kimberley Clark as a Financial 
Analyst managing marketing projects. Michael 
then had senior financial roles in retailing  
with the launch of Next, the Electricity 
privatisation and as Finance Director of 
quoted Mersey Docks. 
He was involved from 2001 with the Care 
Charity, Community Integrated Care as a 
Trustee and then Director of Finance and 
from 2006 as Finance Director of National 
Fostering Agency. Michael joined CareTech  
in 2010 to establish the Foster Care division 
and oversaw its growth. He became Group 
Finance Director on 2 August 2011 and he  
is also Company Secretary.
Farouq Sheikh 
Executive Chairman (aged 57)
Haroon Sheikh BSc 
Chief Executive Officer (aged 59)
Michael Hill 
Group Finance Director (aged 64)
30 CareTech Holdings PLC Annual Report and Accounts 2015
Board of Directors
An experienced and 
driven corporate board After graduating from University College 
Dublin with a Bachelor of Commerce Degree, 
Karl trained as a chartered accountant with 
KPMG in Dublin. He has worked in the 
corporate finance departments at a number 
of merchant banks and stockbrokers, latterly 
at Credit Lyonnais Securities for seven years 
and Robert W. Baird for two years until June 
2002. Karl set up Ashling Capital LLP in 
December 2002 to provide consultancy 
services to quoted and private companies.  
He sits on a number of AIM quoted and 
private company boards.
Mike has a significant track record in the 
social care, health and disability sectors.  
For five years he was Director of the National 
Disability Team, responsible for policy and 
practice for disabled students in higher 
education. Mike was Director of Operations 
for the Disability Rights Commission for two 
years and has been Chief Executive Officer  
of ecdp, an Essex-based user-led disability 
organisation, since October 2007. Mike  
spent nine months as acting Chair of a  
large acute hospital trust in Essex and has 
previously chaired an expert panel on Access 
to Work, the Government’s flagship disability 
employment programme. Mike has been 
awarded an Honorary Doctor of Education 
for disability leadership from Anglia Ruskin 
University.
Jamie has a strong track record in City 
corporate and investor relations. Having started 
his career with Touche Ross, Jamie became an 
Investment analyst with Parsons & Co. (latterly 
Allied Provincial Securities) in 1978 and was an 
Extel rated analyst. Following this he joined 
Brewin Dolphin in 1996 and in 2011 he became 
Head of Brewin Dolphin’s Corporate Advisory  
& Broking Division and led the demerger of 
Brewin Dolphin’s investment banking activities 
through a merger with Madrid-based asset 
manager and M&A house N+1, to create 
N+1Brewin. He became Chief Executive Officer 
of the new business in 2013, latterly overseeing 
the subsequent merger with Singer Capital 
Markets. Jamie is a senior advisor to Cantor 
Fitzgerald Europe and a Non-Executive Director 
of 21st Century Technology plc. With over  
30 years in the City, Jamie has a wealth  
of experience in advising both institutional 
investors and corporate clients.
Karl Monaghan 
Non-Executive Director (aged 53)
Dr Mike Adams OBE 
Non-Executive Director (aged 44)
Jamie Cumming
Non-Executive Director (aged 65)
31 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements Board and Committee meetings
The Board meets in formal session regularly, usually once each 
month, and members are supplied with financial and operational 
information in good time for scrutiny in advance of these meetings.
The Directors attended the following meetings in the year to  
30 September 2015:
Board
Audit 
Committee
Remuneration 
Committee
Care 
Governance & 
Safeguarding 
Committee
Farouq Sheikh 10 – 4
*
–
Haroon Sheikh 10 – 1
*
1
*
Michael Hill 10 2
*
4 2
Karl Monaghan 10 2 4 3
Mike Adams 10 2 3 3
Jamie Cumming 9 1 4 3
* by invitation.
What decision-making responsibilities does the Board have?
Matters which are reserved to the Board for specific consideration and 
decision include:
 – financial reporting and controls including statutory matters such  
as the approval of final and interim financial statements and 
dividend declarations;
 – Board membership and other senior, key personnel appointments;
 – review of corporate governance arrangements;
 – Group strategy matters including the approval of annual budgets, 
acquisitions and disposals;
 – review of the processes for monitoring and evaluating risk and  
the effectiveness of the Group’s system of internal control and 
operational efficiency;
 – review and supervision of treasury and financial policies; and
 – s h ar eh o l d er c o m m u ni c a t i o n s .
Matters are delegated to Board Committees, individual Directors  
or executive management where appropriate. The Directors believe 
the Board is soundly constituted although, at this stage of the Group’s 
development, it is felt the functions of a Nominations Committee  
can be adequately fulfilled by deliberation of the full Board; this will 
nevertheless be kept under review. When the need for an additional 
Non-Executive Director is identified the Board appoints advisers  
to nominate experienced relevant and appropriate candidates. 
Board members meet the candidates and come to a collective  
view on appointments.
Who is on the Audit Committee and what do they do?
The Audit Committee comprises Karl Monaghan (Chairman),  
Mike Adams and Jamie Cumming. The Group Finance Director and 
representatives of the external auditor attend meetings by invitation  
as required. The Committee meets at least twice each year and 
receives reports from the company’s management and external 
auditor relating to the annual and interim accounts and the 
accounting and internal control systems throughout the Group. 
The Committee has direct and unrestricted access to the external 
auditor and reviews all services being provided by them to evaluate 
their independence and objectivity, taking into consideration relevant 
professional and regulatory requirements in order to ensure that  
said independence and objectivity are not impaired by the provision  
of permissible, non-audit services. The Committee has carefully 
considered the level of non-audit services and have concluded that 
this does not impact on the independence of the auditors. Details of 
the amount paid to the external auditor during the year, for audit and 
other services, are set out in note 6 to the financial statements.
Do we comply with the UK Corporate Governance Code?
The CareTech Board of Directors (the “Board”) remains committed to 
achieving the highest standards of integrity, ethics, professionalism 
and business practice throughout its operations.
We do not comply with the UK Corporate Governance Code. 
However, we have reported on our corporate governance 
arrangements by drawing upon best practice available, including 
those aspects of the UK Corporate Governance Code we consider  
to be relevant to the company and best practice.
This sets the tone for corporate behaviour and helps make our 
governance meaningful and focused on improving our business 
and protecting Shareholder Value.
Who is on our Board?
As Executive Chairman, Farouq Sheikh leads the Board and is 
responsible for its effective running. The Chief Executive is Haroon 
Sheikh and Michael Hill is the Group Finance Director. The Directors’ 
biographies appear on pages 30 to 31 and detail their experience  
and suitability for leading and managing the Group.
Karl Monaghan, the Senior Independent Director, Mike Adams and 
Jamie Cumming are the three Non-Executive Directors and the  
Board considers each of them as independent. Collectively, the 
Non-Executive Directors bring a valuable range of expertise and 
experience in assisting the Group to achieve its strategic aims.
In the furtherance of their duties, all Directors are able to take 
independent professional advice at the expense of the company  
and those newly-appointed are made aware of their responsibilities  
by the Company Secretary. The Board approves the appointment  
and removal of the Company Secretary.
All Directors are required to submit themselves for re-election at  
least every three years and new Directors are subject to election by 
shareholders at the first opportunity following their appointment.
How do we deal with conflicts of interest?
Following amendments to the Company’s Articles of Association 
in 2008 to reflect certain provisions of the Companies Act 2006 
relating to conflicts of interest that came into force on 1 October 
2008, the Board will follow a specific procedure when deciding 
whether to authorise a conflict or potential conflict of interest.  
Firstly, only independent Directors (i.e. those that have no interest  
in the matter under consideration) will be able to take the relevant 
decision. Secondly, in taking the decision the Directors must act  
in a way they consider, in good faith, will be most likely to promote 
the company’s success. In addition, the Directors will be able to 
impose limits or conditions when giving authorisation if they think  
this is appropriate. It remains the Board’s intention to report annually 
on the company’s procedures for ensuring that the Board’s power  
of authorisation in respect of conflicts is operated effectively and  
that procedures have been followed.
32 CareTech Holdings PLC Annual Report and Accounts 2015
Corporate Governance Report  We have held several useful meetings with regulators and also  
invited key regulation managers to attend our Care Governance and  
Safeguarding Committee. The Committee is seen as a pioneering 
initiative that has won friends and encouragement from regulators  
and commissioners alike. The Committee brings Non-Executive 
Directors into a much closer relationship with our everyday work  
and they have adopted a robust scrutiny approach to care practice. 
This in itself has had a positive impact on care quality and the 
executive team has been encouraged to introduce quality  
initiatives across the company.
The Group has 125 adult services regulated by the Care Quality 
Commission (CQC) who assess the services against approved 
essential standards of quality and safety. The regulators test and 
publicly record whether services are compliant or non-compliant 
against those standards. 
The new monitoring system has four levels of CQC reporting 
outcomes and has been applied so far by CQC to 40% of the Group’s 
Adult Services. The National distribution across the four outcomes is 
shown in the table below with 92% of services being either Good or 
a service which has a requirement which needs to improve to achieve 
good. Above Good is Outstanding for 1% of services and below is 
Inadequate for 7%. For the Group’s services the published reports are 
as follows with all the services in the middle two outcomes:
Ratings Outstanding Good
Requires 
improvement Inadequate
National 1% 59% 33% 7%
Group 0% 69% 31% 0%
Adult services in Wales are regulated under different national 
legislation and are not currently rated on any form of scale, though  
all are compliant.
Our Children division is regulated by the Office for Standards 
in Education (Ofsted) in England and these services are rated as 
Outstanding or Good under the old monitoring system. Since April 
2015 for Residential Services there is no longer an overall rating and 
services are rated under three domains and the Group has had seven 
published reports. The Fostering services in England are regulated by 
Ofsted and one is rated Outstanding and two are rated Good. In Wales 
the services are regulated by the Care and Social Services Inspectorate 
Wales (CSSIW) and are not currently rated on any form of scale. The 
Care Inspectorate for Scotland who regulate both Adults and Children 
Services have the majority of the Group’s rated Residential Services as 
Excellent or Very Good for both the established services and the 
acquired services in Scotland. 
The Care Governance and Safeguarding Committee has oversight  
of all issues and reports relating to the well-being of service users, 
commissions enquiries into matters of concern and ensures that the 
Executive Team operates to the highest possible level of professional 
care standards. Throughout the past year the Care Governance and 
Safeguarding Committee has invited operational managers, regulators 
and local safeguarding lead officers to attend its meetings.
The Care Governance and Safeguarding Committee works in close 
association with the Group’s internal regulatory compliance team  
who operate across all divisions, reporting direct to the CEO.
Who is on the Remuneration Committee and what  
do they do?
The composition and role of the Remuneration Committee is set out 
in the Remuneration Report on pages 37 to 38. Also detailed in that 
report are Directors’ remuneration, shareholdings and share options 
scheme information. 
A key Group strategy is to attract and retain talented and committed 
personnel, at every level of the organisational hierarchy and the 
Committee aims to foster remuneration philosophy, policies and 
procedures to achieve this.
The Group operates in a highly competitive environment. For the 
Group to continue to compete successfully, it is essential that the  
level of remuneration and benefits offered achieve the objectives  
of attracting, retaining, motivating and rewarding the necessary  
high calibre of individuals at all levels across the Group.
The Group therefore sets out to provide competitive remuneration  
to all its employees, appropriate to the business environment in  
the market in which it operates. To achieve this, the remuneration 
package is based upon the following principles:
 – total rewards should be set to provide a fair and attractive 
remuneration package;
 – appropriate elements of the remuneration package should  
be designed to reinforce the link between performance and  
reward; and
 – Executive Directors’ incentives should be aligned with the  
interests of shareholders.
The remuneration strategy is designed to be in line with the Group’s 
fundamental values of fairness, competitiveness and to support the 
Group’s corporate strategy. A cohesive reward structure consistently 
applied and with links to corporate performance, is seen as critical  
in ensuring attainment of the Group’s strategic goals.
Who is on the Care Governance and Safeguarding 
Committee and what do they do?
The Care Governance and Safeguarding Committee is chaired by  
Mike Adams and the other members of the Board Committee are  
Karl Monaghan and Jamie Cumming. During the year the Group 
Finance Director Michael Hill left the committee and Group’s  
Clinical Director Dr. Junaid Bajwa and the Chief Operating Officer 
John Ivers joined the Committee.
The Committee was formed because the Board is sensitive to the 
public’s increased awareness and anxiety about care governance  
and safeguarding. In 2013 the Whistleblowing “Tell Us” Campaign  
was introduced by this committee and it is pioneering because it 
provides direct access to the CEO.
The Group has always been regarded as a careful and thoughtful 
provider of care and the Committee was formed to closely examine 
and pursue improvements to all matters relating to the care 
governance and the safeguarding of those we support, including 
health and safety, across the Group. Last year it included external 
attendees to its meetings such as the Head of Safeguarding for 
Hertfordshire County Council and received external presentations 
such as Conflict Management from Maybo to help the Committee 
understand best practice and in 2015 met with CQC. 
33 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements A process of control and hierarchical reporting provides for a 
documented and auditable trail of accountability. These procedures 
are relevant across all Group operations: they provide for successive 
assurances to be given at increasingly higher levels of management 
and, finally, to the Board.
The processes used by the Board to review the effectiveness of the 
system of internal controls include the following:
 – annual budgets are prepared for each operating business. Monthly 
management reporting focuses on actual performance against 
these budgets for each operating business;
 – management reports and external audit reports on the system  
of internal controls and any material control weaknesses that  
are identified;
 – discussions with management including discussions on the actions 
taken on problem areas identified by Board members or in the 
external audit reports;
 – policies and procedures for such matters as delegation of 
authorities, capital expenditure and treasury management as well  
as regular updates;
 – review of the adequacy of the level of experienced and professional 
staff throughout the business and the expertise of individual staff 
members so that they are capable of carrying out their individual 
delegated responsibilities; and
 – review of the external audit work plans.
By order of the Board
Michael Hill
Company Secretary
20 January 2016
Metropolitan House 
3 Darkes Lane
Potters Bar
Hertfordshire
EN6 1AG
Have we maintained an effective relationship  
with our shareholders?
The Board appreciates that effective communication with the 
company’s shareholders and the investment community as a  
whole is a key objective.
The views of both institutional and private shareholders are important, 
and these can be varied and wide-ranging, as is their interest in the 
company’s strategy, reputation and performance.
The Executive Chairman has overall responsibility for ensuring this 
communication is effectively conveyed and for making the Board  
fully aware of key shareholders’ views, comments and opinions.
Contact with investors throughout the year is a priority and the  
Board strives to look after their interests. General presentations to 
major shareholders following the publication of the Group’s annual 
and interim results are conducted by the Executive Chairman and  
the Group Finance Director as are regular meetings through the year 
with fund managers and investment analysts.
In February 2015 the Executive Chairman and Group Finance Director 
had numerous meetings with existing shareholders and potential 
shareholders as part of the share placement and the demonstration  
of the effective relationship with shareholders was the high demand 
for shares when the share placement was completed in March 2015.
Robust year-on-year dividend growth is an objective and all shareholders 
are encouraged to attend the company’s Annual General Meeting,  
which all Board members attend, as this provides an opportunity to 
address questions to the Directors.
The Group’s annual and interim reports are sent to all shareholders and 
all results, company announcements and related investor information 
can be accessed via the Group’s website, www.caretech-uk.com.  
The website is under constant review in an effort to maximise the 
effectiveness of information made available to shareholders.
How do we manage our internal controls and risks?
The Board is ultimately responsible for the Group’s system of internal 
controls and for reviewing its effectiveness. The role of management 
is to implement Board policies on risk and control. The system of 
internal controls is designed to manage rather than eliminate the  
risk of failure of the achievement of business objectives. In pursuing 
these objectives, internal controls can only provide reasonable and 
not absolute assurance against material misstatement or loss.
The recent challenging business climate has resulted in a sustained 
focus on the approach to risk. The Directors consider robust risk 
management to be crucial to the Group’s success and give a high 
priority to ensuring that adequate systems are in place to evaluate and 
limit risk exposure. They have overseen the further development of 
processes and procedures for identifying, analysing and managing 
the significant risks faced by the Group. These risks have been 
discussed in the strategic report on page 18. These processes have  
been implemented during the year under review and up to the date  
of approval of this annual report and financial statements. The 
processes and procedures are regularly reviewed by the Board.
34 CareTech Holdings PLC Annual Report and Accounts 2015
Corporate Governance Report 
continued The Group operates a sharesave share option scheme for eligible 
employees, details of which can be found in note 20. The Board  
feels that share ownership among employees fosters team spirit and 
motivation and will contribute to the ultimate success of the Group.
It is the Group’s policy to ensure that disabled persons are treated  
fairly and consistently in terms of recruitment, training, career 
development and promotion and that their employment opportunities 
should be based on a realistic assessment of their aptitudes and 
abilities. Wherever possible, the Group will continue the employment  
of persons who become disabled during the course of their 
employment through retraining, acquisition of special aids and/or 
equipment or the provision of suitable alternative employment.
Authority to allot shares
Pursuant to resolutions approved at the Annual General Meeting  
on 3 March 2015 the Directors were granted authority to allot shares  
with an aggregate nominal value of up to the value of one third of  
the share capital of the company.
The Directors were also granted authority to allot equity securities for 
cash to the holders of ordinary shares as the Directors may determine  
on the register on a fixed record date in proportion (as nearly as may be) 
to their respective shareholding or in accordance with the rights  
attached thereto.
Resolutions for the renewal of both of the above will be proposed  
at the forthcoming Annual General Meeting, further details of which, 
together with explanations of the resolutions to be proposed at the 
meeting, appear in the “Notice of AGM and explanatory circular  
to Shareholders” which will be sent to shareholders in good time  
prior to the meeting.
Substantial shareholdings
As at 8 December 2015, being the date of the preliminary results 
announcement, the company had been notified of, or was otherwise 
aware of, the following substantial interests of 3% or more in the 
ordinary share capital of the company, other than those in respect  
of the Directors which are set out in the Remuneration Report on  
page 38.
Number of 
ordinary 
shares of 0.5p Percentage
Henderson Global Investors 10,797,854 17.34%
Norges Bank 2,026,861 3.25%
Octopus Investment Nominees 6,348,105 10.19%
Hof Hoorneman Bankiers 3,159,500 5.07%
Hendrik M Van Hejiest 2,870,000 4.6%
Hargreave Hale 2,323,572 3.73%
Majedie Asset Management 2,232,391 3.58%
The Directors present their report and the audited Group financial 
statements for the year ended 30 September 2015.
Business review and future developments
The consolidated statement of comprehensive income detailed on 
page 41 sets out the Group’s financial results for the year.
Key performance indicators are set out in the ‘Highlights’ on pages 
16 and 17. 
Key risks and uncertainties
There are a number of risks and uncertainties which could impact on 
the Group’s long-term performance. These are set out in the Strategic 
Report on pages 18.
Dividends
Dividends of £4,153,000 have been paid during the year. The Directors 
propose a final dividend of 5.60p per share (2014: 5.40p) subject to the 
approval at the forthcoming Annual General Meeting.
Share listing
The company’s ordinary shares are admitted to and traded on AIM,  
a market operated by the London Stock Exchange. Further information 
regarding the company’s share capital, including movements during 
the year are set out in note 21 to the financial statements.
Financial instruments
The Group is exposed to a combination of price, credit, interest rate  
and cashflow risks. The Group uses financial instruments including 
cash, borrowings and interest rate swaps, the main purpose of which 
are to raise finance for the Group’s activities and to manage interest  
rate risks. Disclosures in respect of these instruments are set out in  
note 24 to the financial statements.
Employees
The Directors recognise the benefits which arise from keeping 
employees informed of the Group’s progress and plans and through 
their participation in the Group’s performance. The Group is therefore 
committed to providing its employees with information on a regular 
basis, to consulting with them on a regular basis so that their views  
and/or concerns may be taken into account in taking decisions which 
may affect their interests, and to encouraging their participation in 
schemes through which they will benefit from the Group’s progress  
and profitability. CareTech aims to foster a working environment in 
which all employees are treated with courtesy and respect and seeks  
at all times to provide opportunities to develop and reach their  
full potential.
35 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements
Directors’ Report Auditor
Grant Thornton UK LLP have expressed their willingness to continue  
in office and, in accordance with section 489 of the Companies Act 
2006, a resolution for their reappointment will be proposed at the 
forthcoming Annual General Meeting.
By order of the Board
Michael Hill
Company Secretary
20 January 2016
Metropolitan House
3 Darkes Lane
Potters Bar
Hertfordshire
EN6 1AG
Directors
The names of the current Directors together with brief biographical 
details are shown on pages 30 to 31.
In accordance with the articles of association, M. Adams and J. Cumming 
retire by rotation and, being eligible, offer themselves for re-election. 
The names of all Directors who held office in the year are as follows:
Farouq Sheikh
Haroon Sheikh 
Karl Monaghan
Mike Adams
Michael Hill 
Jamie Cumming 
The terms of the Directors’ service contracts and details of the 
Directors’ interests in the shares of the company, together with details 
of share options granted and any other awards made to the Directors, 
are disclosed in the Remuneration Report commencing on page 37.
Directors’ insurance
The company maintains appropriate Directors’ and Officers’ liability 
insurance, as permitted by the Companies Act 2006.
Going concern
After making appropriate enquiries and reviewing the year end balance 
sheet position, the Directors have reasonable expectations that the 
Group is well placed to manage its business risks successfully and has 
adequate resources to continue in operational existence for at least  
the next 12 months. The Group has prepared detailed budgets and 
cashflow forecasts and have considered the capital and working capital 
requirements. There are a number of Banking Covenants which ratchet 
depending upon time and Group performance. The Directors forecast 
that they are able to meet all banking covenants which are reviewed 
regularly. For this reason the Directors continue to adopt the going 
concern basis in preparing the financial statements.
Post balance sheet events
On the 1 December 2015, the Group acquired the entire issued share 
capital of ROC North West Limited and all of the children’s residential 
properties from which it operates (“ROC”). ROC is a North West based 
provider of residential care and education services for young people 
with complex needs. 
The total consideration for ROC is up to £11.425 million, comprising 
a net initial cash payment of £8.725 million and an earn-out of up to 
£2.7 million payable. This is made up of £275,000 which was settled 
on completion of the acquisition through the issue of 100,000 
ordinary shares in the capital of the company at a price of 275 pence 
per Ordinary Share. The remainder of the consideration under the 
earn-out of up to £2.425 million will be determined with reference to 
ROC’s EBITDA performance over the period to July 2016 and will be 
funded from current cash reserves.
The net book value of the acquired entity was £1.5m. The Directors 
will review the fair value of the intangible assets, tangible assets and 
liabilities and will report on them and the goodwill arising on 
acquisition in the interim financial statement.
36 CareTech Holdings PLC Annual Report and Accounts 2015
Directors’ Report
continued The following comprised the principal elements of remuneration  
for Executive Directors and Executive Management for the year  
under review:
 – basic salary;
 – bonus;
 – benefits, including car allowance, vehicle expenses and healthcare 
insurance; and
 – pension contribution.
The remuneration for Non-Executive Directors is set by the full Board 
on the recommendation of the Executive Directors. Non-Executive 
Directors are not eligible to participate in any of the company’s bonus 
or share option schemes.
Directors’ service agreements
All Executive Directors’ service contracts are subject to 12 months’ 
notice of termination on either side.
The Non-Executive Directors have each been appointed under 
contracts which are subject to three months’ notice of termination  
on either side.
The Remuneration Committee comprises three Non-Executive 
Directors, Jamie Cumming (Chairman), Karl Monaghan and Mike 
Adams, and meets at least twice each year. The Company Secretary, 
Michael Hill, is the secretary of the Remuneration Committee.
The Committee members have no personal financial interest, other 
than as shareholders, in the matters to be decided. They have no 
conflicts of interest arising from cross-directorships or from being 
involved in the day-to-day business of the Group. They do not 
participate in any bonus, share option or pension arrangements.
The Committee’s principal duties are to review the scale and structure 
of the remuneration and service contracts for Executive Directors 
and Senior Management and it also administers the company’s share 
option schemes.
The Committee takes into consideration environmental, social and 
governance (“ESG”) issues, in relation to corporate performance, when 
setting the remuneration of Executive Directors and takes steps to 
ensure that the incentive structure for Senior Management does not 
raise ESG risks by inadvertently motivating irresponsible behaviour.
Remuneration policy
CareTech’s remuneration policy is to provide for each of its Executive 
Directors and key personnel a package which is adequate to attract, 
retain and motivate individuals of the appropriate calibre, whilst at  
the same time not paying more than is necessary for this purpose.
The Remuneration Committee has the objective of ensuring that 
remuneration packages are offered which:
 – are set at a level reflecting the competitive market in which the 
Group operates;
 – have a significant part of remuneration linked to the achievement  
of performance targets;
 – have due regard to actual and expected market conditions;
 – are structured in accordance with the interests of shareholders; and
 – foster the development of a high-performance culture across  
the Group.
37 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements
Remuneration Report Directors’ remuneration (audited) 
The various elements of the remuneration received by each Director were as follows:
Salary and fees Benefits Annual bonus Total Pension
Year to 30 September
2015  
£000
2014  
£000
2015  
£000
2014  
£000
2015  
£000
2014  
£000
2015  
£000
2014  
£000
2015  
£000
2014  
£000
Current Directors
Farouq Sheikh 422 264 31 16 50 36 503 316 – 8
Haroon Sheikh 209 209 45 43 50 36 304 288 – 10
Karl Monaghan 43 43 – – – – 43 43 – –
Mike Adams 28 28 – – – – 28 28 – –
Michael Hill 150 150 71 3 – 86 221 239 3 –
Jamie Cumming 28 28 – – – – 28 28 – –
Stewart Wallace
(1)
– 150 – 21 – 36 – 207 – 8
Total 880 872 147 83 100 194 1,127 1,149 3 26
1 Stewart Wallace retired on 27 September 2014.
Directors’ interests
The Directors who held office at the end of the financial year had the following interests in the ordinary share capital of the company according  
to the register of Directors’ interests:
30 September 2015
Number of ordinary
0.5p shares
30 September 2014
Number of ordinary
0.5p shares
Westminster Holdings Limited
(1)
11,263,519 10,787,328
Cosaraf Trust
(2)
2,060,091 2,060,091
Cosaraf Pension Fund
(3)
170,000 170,000
Farouq Sheikh 485,000 485,000
Haroon Sheikh 485,000 485,000
Michael Hill 47,619 –
Karl Monaghan 31,250 31,250
Mike Adams 2,300 2,300
1 Westminster Holdings Limited is a company owned by a trust, the beneficiaries of which include Farouq Sheikh and Haroon Sheikh.
2 Cosaraf Trust is a trust whose beneficiaries are the children of Farouq Sheikh and Haroon Sheikh. Farouq Sheikh and Haroon Sheikh are the trustees of this trust.
3 Cosaraf Pension Fund is a self-administered scheme established for the benefit of Farouq Sheikh and Haroon Sheikh.
Directors’ share options
Farouq Sheikh, Haroon Sheikh and Michael Hill own 300,000, 400,000 and 175,000 ordinary shares of 0.5p respectively under the Group’s 
Executive Shared Ownership Plan (see note 20). There were no changes in the Director’s holdings under the Group’s Executive Shared 
Ownership Plan during the year ended 30 September 2015. None of the Directors have any share options in the company. 
By order of the Board
Jamie Cumming
Chairman of the Remuneration Committee 
20 January 2016 
Metropolitan House  
3 Darkes Lane 
Potters Bar 
Hertfordshire 
EN6 1AG
38 CareTech Holdings PLC Annual Report and Accounts 2015
Remuneration Report
continued The Directors confirm that: 
 – so far as each director is aware, there is no relevant audit 
information of which the company’s auditor is unaware; and
 – the Directors have taken all the steps that they ought to have  
taken as Directors in order to make themselves aware of any 
relevant audit information and to establish that the auditor is  
aware of that information.
The Directors are responsible for the maintenance and integrity of  
the corporate and financial information included on the company’s 
website. Legislation in the United Kingdom governing the preparation 
and dissemination of financial statements may differ from legislation 
in other jurisdictions. 
By order of the Board
Michael Hill
Company Secretary
20 January 2016
Metropolitan House
3 Darkes Lane
Potters Bar
Hertfordshire
EN6 1AG
The Directors are responsible for preparing the Annual Report  
and the financial statements in accordance with applicable law  
and regulations.
Company law requires the Directors to prepare financial statements 
for each financial year. Under that law the Directors have to prepare 
the financial statements in accordance with International Financial 
Reporting Standards (IFRSs) as adopted by the European Union. Under 
company law the Directors must not approve the financial statements 
unless they are satisfied that they give a true and fair view of the state 
of affairs and profit or loss of the company and Group for that period. 
In preparing these financial statements, the Directors are required to:
 – select suitable accounting policies and then apply them consistently;
 – make judgements and accounting estimates that are reasonable 
and prudent; and
 – state whether applicable IFRSs have been followed, subject  
to any material departures disclosed and explained in the  
financial statements.
The Directors are responsible for keeping adequate accounting 
records that are sufficient to show and explain the company’s 
transactions and disclose with reasonable accuracy at any time  
the financial position of the company and enable them to ensure  
that the financial statements comply with the Companies Act 2006.  
They are also responsible for safeguarding the assets of the company 
and hence for taking reasonable steps for the prevention and 
detection of fraud and other irregularities.
39 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements
Statement of Directors’ Responsibilities Opinion on other matter prescribed by the  
Companies Act 2006
In our opinion the information given in the Strategic Report and  
the Directors’ Report for the financial year for which the financial 
statements are prepared is consistent with the financial statements.
 
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where 
the Companies Act 2006 requires us to report to you if, in our opinion:
 – adequate accounting records have not been kept by the parent 
company, or returns adequate for our audit have not been received 
from branches not visited by us; or
 – the parent company financial statements are not in agreement  
with the accounting records and returns; or
 – certain disclosures of directors’ remuneration specified by law  
are not made; or
 – we have not received all the information and explanations we 
require for our audit.
Jeremy Read
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Milton Keynes
20 January 2016
We have audited the financial statements of CareTech Holdings PLC 
for the year ended 30 September 2015 which comprise the 
Consolidated Statement of Comprehensive Income, the Consolidated 
and Company Balance Sheets, the Consolidated and Company 
Statements of Changes in Equity, the Consolidated and Company 
Cash Flow Statements and the related notes. The financial reporting 
framework that has been applied in their preparation is applicable law 
and International Financial Reporting Standards (IFRSs) as adopted by 
the European Union and, as regards the parent company financial 
statements, as applied in accordance with the provisions of the 
Companies Act 2006.
This report is made solely to the company’s members, as a body, 
in accordance with Chapter 3 of Part 16 of the Companies Act 2006. 
Our audit work has been undertaken so that we might state to the 
company’s members those matters we are required to state to them  
in an auditor’s report and for no other purpose. To the fullest extent 
permitted by law, we do not accept or assume responsibility to 
anyone other than the company and the company’s members as  
a body, for our audit work, for this report, or for the opinions we  
have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement  
set out on page 39, the directors are responsible for the preparation  
of the financial statements and for being satisfied that they give a  
true and fair view. Our responsibility is to audit and express an opinion 
on the financial statements in accordance with applicable law and 
International Standards on Auditing (UK and Ireland). Those standards 
require us to comply with the Auditing Practices Board’s Ethical 
Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements  
is provided on the Financial Reporting Council’s website at  
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
 – the financial statements give a true and fair view of the state of the 
Group’s and of the parent company’s affairs as at 30 September 2015 
and of the Group’s profit for the year then ended; 
 – the Group financial statements have been properly prepared in 
accordance with IFRSs as adopted by the European Union; and
 – the parent company financial statements have been properly 
prepared in accordance with IFRSs as adopted by the European 
Union and as applied in accordance with the provisions of the 
Companies Act 2006.
40 CareTech Holdings PLC Annual Report and Accounts 2015
Independent Auditor’s Report
to the members of CareTech Holdings PLC Note
2015 2014
Underlying
£000
Non-
underlying
(i)
£000
Total
£000
Underlying
£000
Non-
underlying
(i)
£000
Total
£000
Revenue 4 124,271 – 124,271 123,302 – 123,302
Cost of sales (76,571) – (76,571) (76,708) – (76,708)
Gross profit 47,700 – 47,700 46,594 – 46,594
Administrative expenses (18,947) (10,938) (29,885) (19,341) (6,799) (26,140)
Operating profit 28,753 (10,938) 17,815 27,253 (6,799) 20,454
EBITDA
(ii)
32,496 (5,707) 26,789 30,653 (2,377) 28,276
Depreciation 12 (3,683) – (3,683) (3,350) – (3,350)
Amortisation of intangible assets 13 – (5,231) (5,231) – (4,422) (4,422)
Share-based payments charge (60) – (60) (50) – (50)
Operating profit 28,753 (10,938) 17,815 27,253 (6,799) 20,454
Financial expenses 5,8 (6,797) (1,621) (8,418) (7,540) (423) (7,963)
Profit before tax 21,956 (12,559) 9,397 19,713 (7,222) 12,491
Taxation 5,9 (3,623) 2,184 (1,439) (3,577) 3,496 (81)
Profit and comprehensive income for the year 
attributable to equity shareholders of the parent 18,333 (10,375) 7,958 16,136 (3,726) 12,410
Earnings per share
Basic 31.80p 13.80p 31.02p 23.86p
Diluted 31.79p 13.80p 31.01p 23.85p
(i)  Non underlying items comprise: amortisation of intangibles, acquisition expenses, fair value adjustments on prior year acquisitions, changes in value and 
additional finance payments in respect of derivative financial instruments, integration, reorganisation and redundancy costs and provision for onerous leases. 
See note 5.
(ii) EBITDA is operating profit stated before depreciation, amortisation of intangible assets, and share-based payments charge.
41 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2015 Note
2015
£000
2014
£000
Non-current assets
Property, plant and equipment 12 256,552 243,309
Other intangible assets 13 34,251 30,826
Goodwill 13 38,651 36,037
329,454 310,172
Current assets
Inventories 515 515
Trade and other receivables 15 12,981 8,675
Derivative financial instruments – 156
Cash and cash equivalents 16 3,702 3,900
17,198 13,246
Total assets 346,652 323,418
Current liabilities
Loans and borrowings 17 1,927 9,222
Trade and other payables 18 16,920 14,642
Deferred and contingent consideration payable 1,500 –
Deferred income 2,142 1,563
Corporation tax 8,306 6,999
Derivative financial instruments 562 –
31,357 32,426
Non-current liabilities
Loans and borrowings 17 160,303 160,811
Deferred tax liabilities 19 21,066 20,602
Derivative financial instruments 227 –
Onerous lease provision 25 – 420
181,596 181,833
Total liabilities 212,953 214,259
Net assets 133,699 109,159
Equity 
Share capital 21 311 260
Share premium 21 76,985 57,221
Shares held by Executive Shared Ownership Plan 21 (1,280) (1,890)
Merger reserve 21 8,748 8,498
Retained earnings 21 48,935 45,070
Total equity attributable to equity shareholders of the parent 133,699 109,159
These financial statements were approved by the Board of Directors on 20 January 2016 and were signed on its behalf by:
  
Farouq Sheikh  Michael Hill
Chairman  Group Finance Director
Company number: 04457287
42 CareTech Holdings PLC Annual Report and Accounts 2015
Consolidated Balance Sheet
at 30 September 2015 Share
capital
£000
Share
premium
£000
Shares held 
by Executive 
Shared 
Ownership 
Plan
£000
Merger
reserve
£000
Retained
earnings
£000
Total
equity
£000
At 1 October 2013 260 57,202 (2,258) 8,498 35,040 98,742
Profit for the year – – – – 12,410 12,410
Total comprehensive income – – – – 12,410 12,410
Issue of ordinary shares – 19 – – – 19
Reduction in shares held – – 368 – – 368
Equity settled share-based payments charge – – – – 50 50
Dividends – – – – (2,430) (2,430)
Transactions with owners recorded directly in equity – 19 368 – (2,380) (1,993)
At 30 September 2014 260 57,221 (1,890) 8,498 45,070 109,159
At 1 October 2014 260 57,221 (1,890) 8,498 45,070 109,159
Profit for the year – – – – 7,958 7,958
Total comprehensive income – – – – 7,958 7,958
Issue of ordinary shares 51 19,764 – 250 – 20,065
Reduction in shares held – – 610 – – 610
Equity settled share-based payments charge – – – – 60 60
Dividends – – – – (4,153) (4,153)
Transactions with owners recorded directly in equity 51 19,764 610 250 (4,093) 16,582
At 30 September 2015 311 76,985 (1,280) 8,748 48,935 133,699
43 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements
Consolidated Statement of Changes in Equity
as at 30 September 2015 Note
2015
£000
2014
£000
Cashflows from operating activities
Profit before tax 9,397 12,491
Adjustments for:
Financial expenses 8,418 7,963
Onerous lease provision charge 304 –
Depreciation 12 3,683 3,350
Amortisation 13 5,231 4,422
Share-based payments charge 60 50
Acquisition transaction cost 5 1,000 250
Exceptional costs 5 4,403 2,127
(Profit) on disposal of property, plant and equipment (134) (85)
Operating cashflows before movement in working capital 32,362 30,568
(Increase) in trade and other receivables (3,669) (777)
Increase in trade and other payables 1,985 552
Operating cashflows before adjustment items 30,678 30,343
Exceptional costs paid 5(i) (1,604) (1,633)
Payments made under onerous contracts (725) (2,577)
Cash inflows from operating activities 28,349 26,133
Tax paid (1,339) (312)
Net cash from operating activities 27,010 25,821
Cashflows from investing activities
Proceeds from sale of property, plant and equipment 1,051 1,887
Payments for business combinations net of cash acquired 23 (6,591) (1,094)
Acquisition of property, plant and equipment (5,976) (6,976)
Acquisition of intangible items 13 (3,893) (3,294)
Payment of acquisition costs (1,182) (862)
Net cash used in investing activities (16,591) (10,339)
Cashflows from financing activities
Proceeds from the issue of share capital (net of costs) 21 19,815 15
Proceeds from new loan (net of costs) 158,525 2,938
Interest paid (6,694) (7,105)
Cash outflow arising from derivative financial instruments (675) (911)
Bank fees on refinancing (1,169) –
Repayment of borrowings (173,556) (6,950)
Payment of finance lease liabilities (2,710) (922)
Dividends paid 22 (4,153) (2,430)
Net cash (used in) financing activities (10,617) (15,365)
Net (decrease)/increase in cash and cash equivalents (198) 117
Cash and cash equivalents at start of year 3,900 3,783
Cash and cash equivalents at 30 September 3,702 3,900
Net debt in the balance sheet comprises:
Note
2015  
£000
2014  
£000
Cash and cash equivalents 16 3,702 3,900
Bank loans 17 (154,716) (166,198)
Finance lease and hire purchase contracts 17 (7,514) (3,835)
Net debt at 30 September (158,528) (166,133)
44 CareTech Holdings PLC Annual Report and Accounts 2015
Consolidated Cash Flow Statement
for the year ended 30 September 2015 1 Background and basis of preparation
CareTech Holdings PLC (the ”Company”) is a company registered and 
domiciled in England and Wales. The consolidated financial statements  
of the company for the year ended 30 September 2015 comprise the 
company and its subsidiaries (together referred to as the “Group”).  
The consolidated financial statements are presented in GBP (£), which  
is the company’s functional currency, rounded to the nearest thousand. 
The Parent Company financial statements present information about 
the company as a separate entity and not about its Group.
The consolidated financial statements were approved for release by 
the Board of Directors on 20 January 2016.
Going concern
The Group’s business activities together with the factors likely to  
affect its future development, performance and position are set out  
in the Chairman’s Statement and Chief Executive’s Statement and 
Performance Review on pages 10 to 11 and pages 20 to 25. The 
financial position of the Group, its cashflows, liquidity position and 
borrowing facilities are described in the Financial Review on pages 
26 to 29. In addition, note 24 to the financial statements includes the 
Group’s objectives, policies and processes for managing its capital, its 
financial risk management objectives, details of its financial instruments 
and hedging activities and its exposures to credit risk, interest rate risk 
and liquidity risk. As highlighted in that note, the Group meets its 
day-to-day working capital requirements through a mixture of bank 
facilities which are sufficient, with cashflow from profits, to fund  
present commitments. Term facilities are utilised to fund capital 
expenditure and short-term flexibility is achieved by the utilisation of 
cash resources in respect of financial liabilities, which are shown in the 
table in note 24 and indicates their contractual cashflow maturities. 
There are a number of Banking Covenants which ratchet depending  
on time and Group performance. The Directors forecast that they are 
able to meet all Banking Covenants which are reviewed regularly.
An extension to the existing bank facilities was agreed with our bankers. 
The facility which was due to expire in January 2017 has been extended  
to January 2019. The cost of borrowing has been reduced through a 
reduction to the interest rate and four loan repayments, which were 
due between 2015 and October 2016 amounting to £21.6m, have been 
deferred. In addition, there is a new uncommitted accordion facility  
of up to £30m which, together with the deferral of loan repayments, 
gives further support to the Group’s acquisition strategy.
The Directors have a reasonable expectation that the Group has 
adequate resources to continue in operational existence for the  
next 12 months from the date of signing these financial statements.  
The Group has prepared detailed budgets and cashflow forecasts  
and has considered the capital and working capital requirements.  
Thus the Directors continue to adopt the going concern basis of 
accounting in preparing the annual financial statements.
2 Accounting policies
(a) Applicable Accounting Standards
The company is a company incorporated in the UK.
The Group financial statements have been prepared and approved  
by the Directors in accordance with International Financial Reporting 
Standards as adopted by the EU (“Adopted IFRSs”).
The accounting policies set out below have, unless otherwise stated, 
been applied consistently to all periods presented in these Group  
financial statements.
During the year, the Group adopted the following standards for the 
period commencing 1 October 2014.  
Pronouncement
IFRS 10 Consolidated Financial Statements
IAS 27 (Revised) Separate Financial Statements
Amendments to IFRS 10,  
IFRS 11 and IFRS 12
Transition Guidance – Amendments  
to IFRS 10, IFRS 11 and IFRS 12
Amendments to IFRS 10,  
IFRS 12, and IAS 27
Investment entities – Amendments  
to IFRS 10, IFRS 12 and IAS 27
Amendments to IAS 32 Offsetting financial assets and 
financial liabilities
Amendments to IAS 36 Recoverable amount disclosures for 
non-financial assets
Amendments to IAS 39 Novation of derivatives and continuation 
of hedge accounting
There are other standards and interpretations in issue but these are 
not considered to be relevant to the Group.
(b) Measurement convention
The financial statements are prepared on the historical cost basis 
except that derivative financial instruments are stated at their fair  
value and contingent consideration is stated at fair value through 
profit or loss.
(c) Basis of consolidation
The Group financial statements consolidate those of the parent 
company and all of its subsidiaries as of 30 September 2015. All 
subsidiaries have a reporting date of 30 September. All transactions and 
balances between Group companies are eliminated on consolidation, 
including unrealised gains and losses on transactions between Group 
companies. Where unrealised losses on intra-Group asset sales are 
reversed on consolidation, the underlying asset is also tested for 
impairment from a Group perspective. Amounts reported in the financial 
statements of subsidiaries have been adjusted where necessary to 
ensure consistency with the accounting policies adopted by the Group.
45 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements
Notes to the Financial Statements Amortisation is charged to the consolidated statement of 
comprehensive income on a straight-line basis over the estimated 
useful lives of intangible assets unless such lives are indefinite. 
Intangible assets with an indefinite useful life and goodwill are 
systematically tested for impairment at each balance sheet date.  
Other intangible assets are amortised from the date they are  
available for use. The estimated useful lives are as follows:
 – customer relationships 1–20 years; and
 – software and licences  5 years.
(f) Inventories
Inventories are valued at the lower of cost and net realisable value. 
The cost of inventories is based on a first-in first-out cost basis.
(g) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. 
Bank overdrafts that are repayable on demand and form an integral 
part of the Group’s cash management are included as a component 
of cash and cash equivalents for the purpose only of the statement of 
cashflows.
(h) Financial instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when the Group 
becomes a party to the contractual provisions of the financial instrument 
and are measured initially at fair value adjusted by transactions costs, 
except for those carried at fair value through profit or loss which are 
measured initially at fair value. Subsequent measurement of financial 
assets and financial liabilities are described below.
Financial assets are derecognised when the contractual rights to  
the cashflows from the financial asset expire, or when the financial 
asset and all substantial risks and rewards are transferred. A financial 
liability is derecognised when it is extinguished, discharged, cancelled 
or expires.
Classification and subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets are 
classified into the following categories upon initial recognition:
 – loans and receivables; and
 – financial assets at fair value through profit or loss (FVTPL).
All financial assets except for those at FVTPL are subject to review for 
impairment at least at each reporting date to identify whether there  
is any objective evidence that a financial asset or a group of financial 
assets is impaired. Different criteria to determine impairment are applied 
for each category of financial assets, which are described below. 
All income and expenses relating to financial assets that are 
recognised in the consolidated statement of comprehensive income 
are presented within finance costs or finance income, except for 
impairment of trade receivables which is presented within other 
administrative expenses.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed  
or determinable payments that are not quoted in an active market. 
After initial recognition, these are measured at amortised cost using 
the effective interest method, less provision for impairment. 
Discounting is omitted where the effect of discounting is immaterial. 
The Group’s cash and cash equivalents, trade and most other 
receivables fall into this category of financial instruments. Individually 
significant receivables are considered for impairment when they are 
past due or when other objective evidence is received that a specific 
counterparty will default. Receivables that are not considered to be 
individually impaired are reviewed for impairment in groups, which  
are determined by reference to shared credit risk characteristics.  
The impairment loss estimate is then based on recent historical 
counterparty default rates for each identified group.
2 Accounting policies  (continued)
(d) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated 
depreciation and impairment losses.
Cost includes expenditure that is directly attributable to the acquisition 
of the asset. The cost of self-constructed assets includes the cost of 
materials and direct labour, any other costs directly attributable to 
bringing the assets to a working condition for their intended use and 
capitalised borrowing costs. Purchased software that is integral to  
the functionality of the related equipment is capitalised as part of  
that equipment.
The cost of replacing a component of an item of property, plant  
and equipment is recognised in the carrying amount of the item  
if it is probable that the future economic benefits embodied within  
the component will flow to the Group, and its cost can be measured 
reliably. The carrying amount of the replaced component is 
derecognised. The costs of the day-to-day servicing of property,  
plant and equipment are recognised in the profit or loss as incurred.
Where parts of an item of property, plant and equipment have 
different useful lives, they are accounted for as separate items of 
property, plant and equipment.
Leases in which the Group assumes substantially all the risks and 
rewards of ownership of the leased asset are classified as finance 
leases. Where land and buildings are held under leases the accounting 
treatment of the land is considered separately from that of the 
buildings. Leased assets acquired by way of finance lease are stated  
at an amount equal to the lower of their fair value and the present 
value of the minimum lease payments at inception of the lease,  
less accumulated depreciation and impairment losses. Lease 
payments are accounted for as described in note (n).
Depreciation is charged to the consolidated statement of 
comprehensive income over the estimated useful lives of each  
part of an item of property, plant and equipment. Land (which 
comprises approximately 50% of the land and buildings balance)  
is not depreciated. The Directors reassess the residual value  
estimates, particularly in respect of properties, on an annual basis.  
The estimated useful lives are as follows:
 – freehold buildings  2% straight-line to residual value
 – long leasehold property  over the life of the lease  
(to a maximum of 50 years);
 – short leasehold property  over the life of the lease;
 – fixtures, fittings and equipment  15% straight-line; and
 – motor vehicles 25% reducing balance.
(e) Intangible assets and goodwill
All business combinations are accounted for by applying the acquisition 
method as described in note (r). Goodwill represents the excess of the 
fair value of the consideration over the fair value of the assets, liabilities 
and contingent liabilities acquired on acquisition of subsidiaries. 
Identifiable intangibles are those which can be sold separately or which 
arise from legal rights regardless of whether those rights are separable.
Goodwill is stated at cost less any accumulated impairment losses. 
Goodwill is allocated to cash-generating units and is not amortised  
but is tested annually for impairment.
Negative goodwill (bargain purchase credit) arising on an acquisition is 
recognised in the consolidated statement of comprehensive income.
Other intangible assets that are acquired by the Group are stated at cost 
less accumulated amortisation and impairment losses.
46 CareTech Holdings PLC Annual Report and Accounts 2015
Notes to the Financial Statements
continued (i) Impairment (excluding deferred tax assets)
The carrying amounts of the Group’s assets are reviewed at each 
balance sheet date to determine whether there is any indication of 
impairment. If any such indication exists, the asset’s recoverable 
amount is estimated.
For goodwill, assets that have an indefinite useful life and intangible 
assets that are not yet available for use, the recoverable amount is 
estimated at each balance sheet date.
An impairment loss is recognised whenever the carrying amount of  
an asset or its cash-generating unit exceeds its recoverable amount. 
Impairment losses are recognised in the consolidated statement of 
comprehensive income.
Impairment losses recognised in respect of cash-generating units are 
allocated first to reduce the carrying amount of any goodwill allocated 
to cash-generating units and then to reduce the carrying amount of 
the other assets in the unit on a pro rata basis. A cash-generating unit 
is the smallest identifiable group of assets that generates cash inflows 
that are largely independent of the cash inflows from other assets or 
groups of assets.
Calculation of recoverable amount
The recoverable amount of the Group’s receivables carried at amortised 
cost is calculated as the present value of estimated future cashflows, 
discounted at the original effective interest rate. Receivables with a 
short duration are not discounted.
The recoverable amount of other assets is the greater of their fair  
value less costs to sell and value in use. In assessing value in use, the 
estimated future cashflows are discounted to their present value using  
a pre-tax discount rate that reflects current market assessments of the 
time value of money and the risks specific to the asset. For an asset that 
does not generate largely independent cash inflows, the recoverable 
amount is determined for the cash-generating unit to which the  
asset belongs.
Reversals of impairment
An impairment loss in respect of a receivable carried at amortised cost 
is reversed if the subsequent increase in recoverable amount can be 
related objectively to an event occurring after the impairment loss  
was recognised.
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, an impairment loss is reversed when  
there is an indication that the impairment loss may no longer exist  
or there has been a change in the estimates used to determine  
the recoverable amount.
An impairment loss is reversed only to the extent that the asset’s 
carrying amount does not exceed the carrying amount that would 
have been determined, net of depreciation or amortisation, if no 
impairment loss had been recognised.
2 Accounting policies  (continued)
Financial assets at FVTPL
Financial assets at FVTPL include financial assets that are either 
classified as held for trading or that meet certain conditions and are 
designated at FVTPL upon initial recognition. All derivative financial 
instruments fall into this category. Assets in this category are measured 
at fair value with gains or losses recognised in the consolidated statement 
of comprehensive income. The fair values of financial assets in this 
category are determined by reference to active market transactions  
or using a valuation technique where no active market exists.
Classification and subsequent measurement of financial liabilities
The Group’s financial liabilities include borrowings, trade and other 
payables and derivative financial instruments. Financial liabilities are 
measured subsequently at amortised cost using the effective interest 
method, except for financial liabilities held for trading or designated at 
FVTPL, that are carried subsequently at fair value with gains or losses 
recognised in the consolidated statement of comprehensive income. 
All derivative financial instruments that are not designated and effective 
as hedging instruments are accounted for at FVTPL.
All interest-related charges and, if applicable, changes in an instrument’s fair 
value that are reported in the consolidated statement of comprehensive 
income are included within finance costs or finance income.
From time to time, the long-term debt held by the Group are 
refinanced as these come to maturity. The Group reviews whether  
the refinancing of the debt is accounted for as a modification or an 
extinguishment of the liability. A substantial modification should be 
accounted for as an extinguishment of the existing liability and the 
recognition of a new liability. A non-substantial modification should 
be accounted for as an adjustment to the existing liability. Both the 
quantitative and qualitative aspects of the modification are taken into 
account ascertain whether the medication is substantial and these can 
include the change in covenants, repayment dates and the effective 
interest rate. If modification accounting is adopted, the carrying  
value of the existing liability is adjusted for fees paid or costs incurred 
and the effective interest rate is amended at the modification date.  
If extinguishment accounting is adopted, the existing liability is 
de-recognised and the new or modified liability is recognised at  
its fair value, the gain or loss equal to the difference between the 
carrying value of the old liability and the fair value of the new one  
is recognised, any incremental costs or fees incurred and any 
consideration paid or received is recognised in profit or loss and  
a new effective interest rate for the modified liability is calculated  
and used in future periods.
Derivative financial instruments
From time to time, the Group enters into derivative financial 
instruments, such as interest rate swaps, to manage its exposure  
to interest rate risk. 
Derivatives are initially recognised at fair value at the date a derivative 
is entered into and are subsequently remeasured to their fair value  
at each balance sheet date. A derivative with a positive fair value is 
recognised as a financial asset whereas a derivative with a negative  
fair value is recognised as a financial liability. The resulting gain or  
loss is recognised in the consolidated statement of comprehensive 
income immediately.
A derivative is presented as a non-current asset or non-current liability 
if the Group has an unconditional right to defer payment beyond  
12 months. Otherwise derivatives are presented as current assets  
or liabilities.
47 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements (m) Revenue
Revenue in respect of the provision of care services is measured as the 
fair value of fee income received or receivable in respect of the services 
provided and is recognised in respect of the care that has been 
provided in the relevant period. Any additional services provided by the 
Group are recognised on provision of the service. Fostering revenue is 
recognised on the basis of the daily placements made with a full day’s 
revenue recognised for every night a placement is with a foster carer. 
Revenue in respect of learning services is directly linked to specific 
achievements, and milestones reached by apprentices at which point the 
funding from the Skills Funding Agency is receivable. A corresponding 
balance is recognised in receivables.
Income which has been invoiced but irrecoverable is treated as a bad 
debt expense. Revenue invoiced in advance is included in deferred 
income until the service is provided. Revenue is recognised net of VAT 
and credit notes. 
(n) Expenses
Finance lease payments
Minimum lease payments are apportioned between the finance 
charge and the reduction of the outstanding liability. The finance 
charge is allocated to each period during the lease term so as to 
produce a constant periodic rate of interest on the remaining balance 
of the liability.
Non underlying items
Non underlying items are events or transactions which, in the opinion 
of the Directors, by virtue of size and incidence are disclosed 
separately in order to improve a reader’s understanding of the 
financial statements. Details are included in note 5.
Financing costs
Financing costs, comprising interest payable on bank loans and 
overdrafts, finance charges on finance leases, the unwinding of the 
discount on provisions and the costs incurred in connection with the 
arrangement of borrowings are recognised in the consolidated 
statement of comprehensive income using the effective interest 
method.
Interest payable is recognised in the consolidated statement of 
comprehensive income as it accrues, using the effective interest 
method. Financing costs that are directly attributable to the acquisition 
or construction of a qualifying asset are capitalised as part of the cost 
of that asset.
Financing costs also include losses arising on the change in fair value 
of derivatives that are recognised in the consolidated statement of 
comprehensive income.
(o) Operating leases
Payments made under operating leases are recognised in the 
consolidated statement of comprehensive income on a straight-line 
basis over the term of the lease. Lease incentives received are 
recognised in the consolidated statement of comprehensive income 
on a straight-line basis over the lease term.
2 Accounting policies (continued)
(j) Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value  
less directly attributable transaction costs. Subsequent to initial 
recognition, interest-bearing borrowings are stated at amortised cost 
with any difference between proceeds (net of transaction costs) and 
the redemption value being recognised in the consolidated statement 
of comprehensive income over the period of the borrowings on an 
effective interest basis.
Borrowings are classified as current liabilities unless the Group has  
an unconditional right to defer settlement of the liability for at least  
12 months after the reporting date.
Interest on qualifying assets is capitalised in accordance with IAS 23 
borrowing costs. Refer to note 8.
(k) Employee benefits
Defined contribution plans
Obligations for contributions to defined contribution pension plans 
are recognised as an expense in the consolidated statement of 
comprehensive income as incurred.
Short-term benefits
Short-term employee benefit obligations are measured on an 
undiscounted basis and are expensed as the related service is 
provided. A provision is recognised for the amount expected to be 
paid under short-term cash bonus or profit-sharing plans if the Group 
has a present legal or constructive obligation to pay this amount as a 
result of past service provided by the employee and the obligation can 
be estimated reliably.
Share-based payment transactions
The grant date fair value of options granted to employees is recognised 
as an employee expense, with a corresponding increase in equity, over 
the period in which the employees become unconditionally entitled to 
the options. The fair value of the options granted is measured using an 
option valuation model, taking into account the terms and conditions 
upon which the options were granted. The amount recognised on 
exercise as an expense is adjusted to take into account an estimate of 
the number of shares that are expected to vest as well as to reflect the 
actual number of share options that vest, except where forfeiture is due 
only to share prices not achieving the threshold for vesting. Options 
lapsed are expunged from the relevant scheme.
Employee Benefit Trust 
The assets and liabilities of the Employee Benefit Trust (EBT) have been 
included in the consolidated financial statements. Any assets held by 
the EBT cease to be recognised on the consolidated statement of 
financial position when the assets vest unconditionally in identified 
beneficiaries. 
The costs of purchasing own shares held by the EBT are shown as a 
deduction against equity. The proceeds from the sale of own shares 
held increase equity. Neither the purchase nor sale of own shares leads 
to a gain or loss being recognised in the consolidated statement of 
comprehensive income. 
(l) Provisions
A provision, other than provisions for deferred taxation, is recognised 
in the balance sheet where a reliable estimate can be made when the 
Group has a present legal or constructive obligation as a result of a 
past event, and it is probable that an outflow of economic benefits will 
be required to settle the obligation. If the effect is material, provisions 
are determined by discounting the expected, risk adjusted, future 
cashflows at a pre-tax risk-free rate.
48 CareTech Holdings PLC Annual Report and Accounts 2015
Notes to the Financial Statements
continued 2 Accounting policies (continued)
(p) Taxation
Tax on the profit or loss for the year comprises current and deferred tax. 
Tax is recognised in the consolidated statement of comprehensive 
income except to the extent that it relates to items recognised directly 
in equity, in which case it is recognised in equity. Current tax is the 
expected tax payable on the taxable income for the year, using tax rates 
enacted or substantively enacted at the balance sheet date, and any 
adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying 
amounts of assets and liabilities for financial reporting purposes and the 
amounts used for taxation purposes. The following temporary 
differences are not provided for: the initial recognition of goodwill; the 
initial recognition of assets or liabilities that affect neither accounting 
nor taxable profit other than in a business combination, and differences 
relating to investments in subsidiaries to the extent that they will 
probably not reverse in the foreseeable future. The amount of deferred 
tax provided is based on the expected manner of realisation or 
settlement of the carrying amount of assets and liabilities, using tax 
rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable 
that future taxable profits will be available against which the asset can 
be utilised. The carrying amounts of deferred tax assets are reviewed at 
each balance sheet date.
(q) Underlying EBITDA and underlying earnings per share
Underlying EBITDA as defined on page 41 is the key profit measure 
used by the Board to assess the trading performance of the Group as 
a whole.
A measure of underlying earnings and underlying earnings per share 
has been presented in order to present the earnings of the Group after 
non underlying items which are not considered to impact an 
assessment of the trading performance of the Group.
(r) Business combinations
The Group applies the acquisition method in accounting for business 
combinations. The consideration transferred by the Group to obtain 
control of a subsidiary is calculated as the sum of the acquisition-date 
fair values of assets transferred, liabilities incurred and the equity interests 
issued by the Group, which includes the fair value of any asset or liability 
arising from a contingent consideration arrangement. Acquisition costs 
are expensed as incurred. Assets acquired and liabilities assumed are 
generally measured at their acquisition-date fair values.
3 Accounting estimates and judgements
The preparation of financial statements in conformity with IFRS 
requires management to make judgements, estimates and 
assumptions which affect the application of accounting policies and 
the reported amounts of assets, liabilities, income and expenses. 
Actual results may differ from these estimates.
Estimates
Estimates and underlying assumptions are reviewed on an ongoing 
basis. Revisions to accounting estimates are recognised in the period 
in which the estimates are revised and in any future periods affected.
In the process of applying the Group’s accounting policies, the 
Directors have made the following estimates and judgements which 
have the most significant effect on the amounts recognised in the 
financial statements:
Goodwill
The Directors use their judgement to determine the extent to which 
goodwill has a value which will benefit the performance of the Group 
over future periods. To assist in making this judgement, the Directors 
undertake an assessment, at least annually, of the carrying value of 
the Group’s capitalised goodwill, using discounted cashflow forecasts 
to derive the “value in use” to the Group of the capitalised goodwill. 
In the assessment undertaken in 2015 value in use was derived from 
discounted 10 to 20-year cashflow projections using a year-on-year 
growth rate of 0% and discount rates relevant to the cost of capital 
adjusted for risks associated with the cash-generating unit. The 
projection period is, in the opinion of the Directors, an appropriate 
period over which to view the future results of the Group’s businesses 
for this purpose. Changes to the assumptions of discount rates, 
growth rates, expected changes to costs and selling prices used  
in making these forecasts could significantly alter the Directors’ 
assessment of the carrying value of goodwill.
Customer relationships
The assessment of the future economic benefits generated from 
acquired customer relationships, and the determination of the related 
amortisation profile, involves a significant degree of judgement based 
on management estimation of future potential revenue and profit and 
the useful lives of the assets. Annual reviews are performed to ensure 
the recoverability of this intangible asset.
Property, plant and equipment
It is Group policy to depreciate property, plant and equipment to their 
estimated residual value over their estimated useful lives. This applies 
an appropriate matching of the revenue earned with the capital costs 
of delivery of services. A key element of this policy is the annual 
estimate of the residual value of such assets and in particular of 
freehold property. Similarly the Directors estimate the useful life 
applied to each category of property, plant and equipment which, in 
turn, determines the annual depreciation charge. Variations in residual 
values or asset lives could impact significantly Group profit through an 
increase in the depreciation charge.
Judgements
Current asset provisions
In the course of normal trading activities, judgement is used to 
establish the net realisable value of various elements of working 
capital, principally trade receivables. Provisions are established for bad 
and doubtful debts. Provisions are based on the facts available at the 
time and are also determined by using profiles, based upon past 
practice, applied to aged receivables.
In estimating the collectability of trade receivables, judgement is 
required assessing their likely realisation, including the current 
creditworthiness of each customer and related ageing of past due 
balances. Specific accounts are assessed in situations where a 
customer may not be able to meet its financial obligations due to 
deterioration of its financial condition, credit ratings or bankruptcy.
49 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements 4 Segmental information
IFRS 8 requires operating segments to be determined based on the Group’s internal reporting to the Chief Operating Decision Maker (“CODM”). 
The CODM has been determined to be the Chief Executive Officer as he is primarily responsible for the allocation of resources to segments 
and the assessment of the performance of each of the segments.
The CODM uses underlying EBITDA as reviewed at monthly Executive Committee and Performance meetings as the key measure of the 
segments’ results as it reflects the segments’ underlying trading performance for the period under evaluation. Underlying EBITDA is a 
consistent measure within the Group.
Inter-segment revenue between the operating segments is not material.
Our two key segments are Adult Services (Adult) and Children Services (Children). Adult Services comprises the Adult Learning Disabilities (ALD) 
and Mental Health (MH) divisions and the Children Services comprises Young People Residential Services (YPR), Foster Care (FC) and Learning 
Services (Learning).
There has been no aggregation of the operating segments in arriving at these reportable segments. 
The segment results for the year ended 30 September 2015, for the year ended 30 September 2014 and the reconciliation of the segment 
measures to the respective statutory items included in the consolidated financial information are as follows:
Year ended 30 September 2015
Continuing Operations
ALD MH Adult YPR FC Learning Children Total
Client Capacity 1,496 114 1,610 205 301 – 506 2,116
Revenue (£000) 75,704 6,436 82,140 22,364 9,761 10,006 42,131 124,271
Underlying EBITDA (£000) 24,460 1,890 26,350 8,230 2,453 935 11,618 37,968
Year ended 30 September 2014
Continuing Operations
ALD MH Adult YPR FC Learning Children Total
Client Capacity 1,450 151 1,601 153 320 – 473 2,074
Revenue (£000) 74,192 7,257 81,449 21,945 12,001 7,907 41,853 123,302
Underlying EBITDA (£000) 22,647 2,482 25,129 7,474 2,966 57 10,497 35,626
Reconciliation of EBITDA to profit after tax:
2015
£000
2014
£000
Underlying EBITDA before unallocated costs 37,968 35,626
Unallocated costs (5,472) (4,973)
Underlying EBITDA 32,496 30,653
Depreciation (3,683) (3,350)
Amortisation (5,231) (4,422)
Share based payments charge (60) (50)
Non underlying items (5,707) (2,377)
Operating profit 17,815 20,454
Financial expenses (8,418) (7,963)
Profit before tax 9,397 12,491
Taxation (1,439) (81)
Profit after tax 7,958 12,410
All operations of the Group are carried out in the UK, the company’s country of domicile. All revenues therefore arise within the UK and 
all non-current assets are likewise located in the UK. No single external customer amounts to 10% or more of the Group’s revenues.
No asset and liability information is presented above as this information is not allocated to operating segments in the regular reporting 
to the Group’s Chief Operating Decision Maker and is not a measure used by the CODM to assess performance and to make resource 
allocation decisions.
50 CareTech Holdings PLC Annual Report and Accounts 2015
Notes to the Financial Statements
continued 5 Non underlying items
Non underlying items are those items of financial performance that, in the opinion of the Directors, should be disclosed separately in order to 
improve a reader’s understanding of the underlying trading performance achieved by the Group as these are one off significant costs which are 
not part of the ordinary course of the business. Non underlying items comprise the following:
Note
2015
£000
2014
£000
Acquisition expenses (i) 1,000 250
Exceptional costs (i) 4,403 2,127
Acquisition and development costs 5,403 2,377
Onerous lease provision (ii) 304 –
Included in EBITDA 5,707 2,377
Amortisation of intangible assets (note 13) 5,231 4,422
Included in administrative expenses 10,938 6,799
Fair value movements relating to derivative financial instruments (iii) 946 (489)
Charges relating to derivative financial instruments (note 5) 675 912
Included in financial expenses 1,621 423
Tax on non underlying items (note 9):
Current (iv) (1,320) (1,384)
Deferred tax (v) (864) (2,112)
Included in taxation (2,184) (3,496)
Total non underlying items (10,375) (3,726)
(i)  The Group incurred a number of exceptional costs relating to the integration of recent acquisitions and the reorganisation of the internal operating and 
management structure and redundancy costs totalling £4,403,000 (2014: £2,127,000). Included in the cashflow statement are acquisition expenses of 
£1,000,000 (2014: £250,000) and integration and reorganisation costs of £1,604,000 (2014: £1,633,000), which were paid in the year.
(ii)   The present value of the future cashflows receivable from the operation of certain leased assets has been assessed as being lower than the present value of 
the rental payments to which the Group is committed. Therefore the Group has provided for £304,000 (2014: £nil) being the present value of any onerous 
element of the remaining lease life. At the balance sheet date the balance on the provision was £nil (2014: £420,000) arising on a business combination.
(iii)   Non underlying items relating to derivative financial instruments include the movements during the year in the fair value of the Group’s interest rate swaps 
which are not designated as hedging instruments and therefore do not qualify for hedge accounting, together with the quarterly cash settlement, and  
accrual thereof. 
(iv)   Represents the current tax on items (i), (ii), (iii) and (iv), above and an adjustment of £nil (2014: £1,000,000) in respect of an exceptional adjustment in respect 
of prior year corporation tax.
(v) Deferred tax arises in respect of the following:
2015
£000
2014
£000
Derivative financial instruments (note iv) 194 (107)
Full provision for deferred tax under IAS 12 (446) 336
Other adjustments 1,116 1,883
864 2,112
6 Auditor’s remuneration
2015
£000
2014
£000
Audit of these financial statements 108 112
Amounts receivable by the auditor and their associates in respect of:
Audit of financial statements of subsidiaries pursuant to legislation 13 26
All other services 19 33
Other services relate to Company Secretarial and review of the Equity reward scheme.
51 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements 7 Staff numbers and costs
The average number of persons employed by the Group (including Directors) during the year, analysed by category, was as follows:
Number of employees
2015 2014
Operational and service delivery staff 3,224 3,340
Maintenance 17 17
Management and administration 195 174
3,436 3,531
The aggregate payroll costs of these persons were as follows:
2015
£000
2014
£000
Wages and salaries 53,721 57,552
Share-based payments charge 60 50
Social security costs 4,825 4,915
Other pension costs 593 577
59,199 63,094
8 Finance expenses
2015
£000
 2014 
£000
Interest expense on financial liabilities at amortised cost:
On bank loans and overdrafts 6,523 7,318
Finance charges in respect of finance leases 274 222
Financial expenses before adjustments 6,797 7,540
Derivative financial instruments (note 5) 1,621 423
8,418 7,963
In accordance with the revision to IAS 23, borrowing costs at £360,000 (2014: £360,000) have been capitalised in the year within property 
plant and equipment. The capitalisation rate used to determine the amount of borrowing costs capitalised is 5%.
9 Taxation
(a) Recognised in the consolidated statement of comprehensive income
2015
£000
2014
£000
Current tax expense
Current year (3,837) 3,797
Current tax on non underlying items (note 5) 1,320 (949)
Corporation tax overprovided in previous periods – (1,000)
Total current tax (2,517) 1,848
  
Deferred tax expense
Current year 214 345
Deferred tax on non underlying items (note 5) 864 (2,112)
Total deferred tax 1,078 (1,767)
Total tax in the consolidated statement of comprehensive income (1,439) 81
52 CareTech Holdings PLC Annual Report and Accounts 2015
Notes to the Financial Statements
continued 9 Taxation (continued)
(b) Reconciliation of effective tax rate 
2015
£000
2014
£000
Profit before tax for the year 9,397 12,491
Tax using the UK corporation tax rate of 20.5% (2014: 22%) 1,926 2,748
Non-deductible expenses 1,334 1,108
Other deferred tax adjustments (1,267) (2,775)
Corporation tax overprovided in previous periods (554) (1,000)
Total tax in the consolidated statement of comprehensive income 1,439 81
The main rate of corporation tax is set to reduce from 20% to 18% by 2020/2021. The legislation relating to the reduction had not been 
substantively enacted at the balance sheet date and as such the deferred tax balances have been recognised at a corporation tax rate of 20.5%.
10 Earnings per share
2015
£000
2014
£000
Profit attributable to ordinary shareholders 7,958 12,410
Weighted number of shares in issue for basic earnings per share 57,653,019 52,011,178
Effects of share options in issue 17,804 21,271
Weighted number of shares for diluted earnings per share 57,670,823 52,032,449
Diluted earnings per share is the basic earnings per share adjusted for the dilutive effect of the conversion into fully paid shares of the weighted 
average number of share options outstanding during the period.
Earnings per share (pence per share) 2015 2014
Basic 13.80p 23.86p
Diluted 13.80p 23.85p 
11 Underlying earnings per share
A measure of underlying earnings and underlying earnings per share has been presented in order to present the earnings of the Group after 
adjusting for non underlying items which are not considered to reflect the underlying trading performance of the Group.
2015
£000
2014
£000
Profit attributable to ordinary shareholders 7,958 12,410
Non underlying items (note 5) 10,375 3,726
Underlying profit attributable to ordinary shareholders 18,333 16,136
Underlying earnings per share (pence per share)
Basic 31.80p 31.02p
Diluted 31.79p 31.01p
53 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements 12 Property, plant and equipment 
Land and
 buildings
£000
Motor
vehicles
£000
Fixtures,
 fittings and
 equipment
£000
Total
£000
Cost
At 1 October 2013 230,445 5,297 16,654 252,396
Additions 3,283 2,158 4,620 10,061
Disposals (1,471) (1,045) (5,087) (7,603)
At 30 September 2014 232,257 6,410 16,187 254,854
At 1 October 2013 232,257 6,410 16,187 254,854
Acquisitions through business combinations 5,298 12 102 5,412
Additions 2,430 6,447 3,846 12,723
Disposals (273) (2,980) (11) (3,264)
At 30 September 2015 239,712 9,889 20,124 269,725
Depreciation and impairment 
At 1 October 2013 3,871 2,725 7,232 13,828
Depreciation charge for the year 560 917 1,873 3,350
Disposals (33) (864) (4,736) (5,633)
At 30 September 2014 4,398 2,778 4,369 11,545
At 1 October 2014 4,398 2,778 4,369 11,545
Depreciation charge for the year 560 1,016 2,107 3,683
Disposals (8) (2,046) (1) (2,055)
At 30 September 2015 4,950 1,748 6,475 13,173
Net book value
At 1 October 2013 226,574 2,572 9,422 238,568
At 30 September 2014 227,859 3,632 11,818 243,309
At 30 September 2015 234,762 8,141 13,649 256,552
Included in the result for the year is a profit of £134,000 (2014: £85,000 profit) on the disposal of freehold property, plant and equipment and 
motor vehicles. Included in property plant and equipment are amounts held under finance leases of £7,514,000 (2014: £3,835,000).
Land and buildings
The net book value of land and buildings is split as follows:
2015
£000
2014
£000
Freehold 234,762 227,859
234,762 227,859
The Group’s freehold property portfolio was independently valued at £294 million. All of the Group’s freehold properties are pledged as 
security for bank borrowings.
54 CareTech Holdings PLC Annual Report and Accounts 2015
Notes to the Financial Statements
continued 13 Intangible assets
Goodwill
£000
Software
and licences
£000
Customer
relationships
£000
Total
£000
Cost
At 1 October 2013 31,120 3,803 40,330 75,253
Additions 4,917 2,792 1,476 9,185
At 30 September 2014 36,037 6,595 41,806 84,438
At 1 October 2014 36,037 6,595 41,806 84,438
Acquisitions through business combinations – – 4,832 4,832
Additions 2,614 3,824 – 6,438
At 30 September 2015 38,651 10,419 46,638 95,708
Amortisation and impairment 
At 1 October 2013 – 2,011 11,142 13,153
Amortisation for the year – 1,021 3,401 4,422
At 30 September 2014 – 3,032 14,543 17,575
At 1 October 2014 – 3,032 14,543 17,575
Amortisation for the year – 1,631 3,600 5,231
At 30 September 2015 – 4,663 18,143 22,806
Net book value
At 1 October 2013 31,120 1,792 29,188 62,100
At 30 September 2014 36,037 3,563 27,263 66,863
At 30 September 2015 38,651 5,756 28,495 72,902
Amortisation
The amortisation charge is recognised in the following line items in the consolidated statement of comprehensive income:
2015
£000
2014
£000
Administrative expenses 5,231 4,422
Impairment testing for cash-generating units containing goodwill
The Group tests goodwill for impairment on an annual basis by considering the recoverable amount of individual cash-generating units against 
carrying value.
Cash-generating units comprise operating segments. This is the lowest level at which goodwill is monitored for impairment by management. 
There are no intangible assets with indefinite useful lives.
For the purpose of impairment testing, the recoverable amount of each cash-generating unit has been calculated with reference to value 
in use. The key assumptions for the period over which management approved forecasts are based and, beyond this, for the value in use 
calculations overall, are those regarding discount rates, growth and occupancy rates, achievement of future revenues, expected changes in 
direct costs during the periods and residual values of freehold properties (which include an assumption for the growth of the House Prices 
Index of 2% per annum and that residual values will be 75% of the indexed market value). In arriving at the values assigned to each key 
assumption management make reference to past experience and external sources of information regarding the future – for example changes 
in tax rates. The assumptions have been reviewed in light of the current economic and public spending environment. The key features of these 
calculations are shown below:
2015 2014
Period over which management approved forecasts are based 1 year 1 year
Growth rate applied beyond approved forecast period 0% 0%
Pre-tax discount rate
Adult Learning Disabilities division 8% 8%
Mental Health division 10% 10%
Young People Residential Services division 8-12% 8%
Foster Care division 8-12% 12%
Learning Services division 8% 8%
55 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements 13 Intangible assets (continued)
In preparing value in use calculations for cash-generating units, cashflow periods of between 10 and 20 years have been used in order to 
match the period of goodwill with the average period of time service users are expected to remain in their relevant home. The discount rates 
used in each value in use calculation have been based upon divisional specific risk taking account of factors such as the nature of service user 
need, cost profiles and the barriers to entry into each market segment as well as other macro-economic factors.
The Directors believe that, even in the current economic and public spending environment and taking into account the nature of the Group’s 
operations, any reasonably possible change in the key assumptions on which the recoverable amounts are based would not cause the 
cash-generating units’ carrying amount to exceed the recoverable amount.
The carrying value of goodwill is split between the following cash-generating units:
2015 
£000
2014
£000
Adult Learning Disabilities division 17,857 17,857
Mental Health division 1,148 774
Adult 19,005 18,631
Young People Residential Services division 6,542 5,326
Foster care division 7,162 7,162
Learning Services division 5,942 4,918
Children 19,646 17,406
38,651 36,037
14 Group undertakings
The Group has the following investments in trading subsidiaries included in the consolidated results for the year:
Registered
Company Number
Country  
of incorporation
Class of 
shares held
Ownership
2015
%
2014
%
CareTech Community Services Limited 02804415 England and Wales Ordinary 100 100
CareTech Community Services (No. 2) Limited 03894564 England and Wales Ordinary 100
a
100
a
Care Support Services Limited 05356025 England and Wales Ordinary 100
a
100
a
Delam Care Limited 02995783 England and Wales Ordinary 100
a
100
a
Sunnyside Care Homes Limited 04589719 England and Wales Ordinary 100
a
100
a
Lonsdale Midlands Limited 02834141 England and Wales Ordinary 100
a
100
a
Daisybrook Limited 03026221 England and Wales Ordinary 100
a
100
a
CareTech Estates Limited 05964868 England and Wales Ordinary 100 100
Community Support Project Limited 05941774 England and Wales Ordinary 100 100
One Step (Support) Limited 04534652 England and Wales Ordinary 100
b
100
b
Counticare Limited 02585666 England and Wales Ordinary 100
a
100
a
H20 Limited 97291 Gibraltar Ordinary 100
a
100
a
Hazeldene Limited
1
FC015967 Gibraltar Ordinary 100
e
100
e
One Six One Limited 04136284 England and Wales Ordinary 100
a
100
a
Barleycare Limited 05156601 England and Wales Ordinary 100
a
100
a
Valeo Limited 04099715 England and Wales Ordinary 100 100
CareTech Estates (No. 2) Limited 06518327 England and Wales Ordinary 100 100
CareTech Estates (No. 3) Limited 06518491 England and Wales Ordinary 100 100
CareTech Estates (No. 4) Limited 06543818 England and Wales Ordinary 100 100
CareTech Estates (No. 5) Limited 07027116 England and Wales Ordinary 100 100
CareTech Estates (No. 6) Limited 08420656 England and Wales Ordinary 100 100
CareTech Estates (No. 7) Limited 08628141 England and Wales Ordinary 100 100
Beacon Care Holdings Limited 03293998 England and Wales Ordinary 100 100
Beacon Care Investments Limited 04351554 England and Wales Ordinary 100 100
Ashcroft House Limited 03390658 England and Wales Ordinary 100
c
100
c
Ashring House Limited 03370991 England and Wales Ordinary 100
c
100
c
Ashview House Limited 03304446 England and Wales Ordinary 100
c
100
c
Beacon Care Limited 03160894 England and Wales Ordinary 100
c
100
c
Beech Care Limited 04050685 England and Wales Ordinary 100
c
100
c
Bright Care Limited 04050733 England and Wales Ordinary 100
c
100
c
Emeraldpoint Limited 03098166 England and Wales Ordinary 100
c
100
c
Glenroyd House Limited 04326288 England and Wales Ordinary 100
c
100
c
Kirkstall Lodge Limited 04778674 England and Wales Ordinary 100
c
100
c
Leigham Lodge Limited 04583599 England and Wales Ordinary 100
c
100
c
56 CareTech Holdings PLC Annual Report and Accounts 2015
Notes to the Financial Statements
continued 14 Group undertakings  (continued)
Registered
Company Number Country of incorporation
Class of 
shares held
Ownership
2015
%
2014
%
Palm Care Limited 04050739 England and Wales Ordinary 100
c
100
c
Vosse Court Limited 04778676 England and Wales Ordinary 100
c
100
c
Wyatt House Limited 04319271 England and Wales Ordinary 100
c
100
c
Addington House Limited 04404355 England and Wales Ordinary 100
d
100
d
Magnolia Court Limited 05444649 England and Wales Ordinary 100
d
100
d
Victoria Lodge Limited 04454845 England and Wales Ordinary 100
d
100
d
Hereson House Limited 04385252 England and Wales Ordinary 100
a
100
a
Huntsmans Lodge Limited 04668317 England and Wales Ordinary 100
a
100
a
White Cliffs Lodge Limited 04351559 England and Wales Ordinary 100
a
100
a
Rosedale Children’s Services Limited 04932054 England and Wales Ordinary 100
a
100
a
Roborough House Limited 05054294 England and Wales Ordinary 100
a
100
a
Franklin Homes Limited 03002865 England and Wales Ordinary 100
a
100
a
Family Assessment Services (Birmingham) Limited 06902547 England and Wales Ordinary 100 100
Greenfields Care Group Limited 04642100 England and Wales Ordinary 100
a
100
a
Greenfields Adolescent Development Limited 04068839 England and Wales Ordinary 100
f
100
f
St Michael’s Support & Care Limited 05978585 England and Wales Ordinary 100
a
100
a
St Michael’s Support & Care Properties Limited 07186925 England and Wales Ordinary 100
a
100
a
Outlook Fostering Services Limited 04357704 England and Wales Ordinary 100
a
100
a
Prestwood Residential Homes Ltd 04129564 England and Wales Ordinary 100
a
100
a
Park Foster Care Ltd 04861395 England and Wales Ordinary 100
a
100
a
Branas Isaf (Holdings) Limited 04827227 England and Wales Ordinary 100
a
100
a
Branas Isaf Personal Development Centre Limited 03744583 England and Wales Ordinary 100
h
100
h
Branas Isaf (Bythnod & Hendre Llywd) Limited 04826628 England and Wales Ordinary 100
h
100
h
Branas Isaf (Dewis Cyfarfod & Cysgod Cyfarfod) Limited 04828115 England and Wales Ordinary 100
h
100
h
Branas Isaf (Llyn Coed) Limited 04826774 England and Wales Ordinary 100
h
100
h
Branas Isaf (Ashfield House) Limited 05761962 England and Wales Ordinary 100
h
100
h
Branas Isaf (Education Centre) Limited 04826662 England and Wales Ordinary 100
g
100
g
Mason Property Development Company Limited 04308273 England and Wales Ordinary 100
g
100
g
Coveberry Limited 01208511 England and Wales Ordinary 100
a
100
a
Uplands (Fareham) Limited 03488896 England and Wales Ordinary 100
i
100
i
CareTech Foster Care Limited 05185612 England and Wales Ordinary 100
j
100
j
Fostering Support Group Limited 02359399 England and Wales Ordinary 100
k
100
k
Phoenix Therapy and Care Limited SC254555 Scotland Ordinary 100
a
100
a
Cameron Care Limited SC283940 Scotland Ordinary 100
a
100
a
Selwyn Care Limited 03737832 England and Wales Ordinary 100
a
100
a
Professional Integrated Care Services Limited 04771613 England and Wales Ordinary 100
a
100
a
Complete Care and Enablement Services Limited 05905163 England and Wales Ordinary 100
l
100
l
Applied Care & Development Limited SC224352 Scotland Ordinary 100
a
100
a
CareTech Fostering Holdings Limited 07206363 England and Wales Ordinary 100
a
100
a
CareTech Fostering Services Limited 07205262 England and Wales Ordinary 100
m
100
m
Park Foster Care Services Scotland Limited SC427502 Scotland Ordinary 100
a
100
a
TLC (Wales) Independent Fostering Limited 04824925 Wales Ordinary 100
l
100
l
EQL Solutions Limited 08758477 England Ordinary 100 100
Spark of Genius Limited SC479758 Scotland Ordinary 100
a
–
Spark Of Genius (Training) Limited SC196146 Scotland Ordinary 100
n
–
Trojan Spark Limited SC453152 Scotland Ordinary 100
o
–
Spark Of Genius (North East) LLP OC384807 England – 50
a
–
Dawn Hodge Associates Limited 04130146 England Ordinary 100
a
–
1  Has a UK designated trading branch, Hazeldene UK Limited
a a subsidiary of CareTech Community Services Limited
b a subsidiary of Community Support Project Limited
c a subsidiary of Beacon Care Holdings Limited
d a subsidiary of Beacon Care Investments Limited
e a subsidiary of H20 Limited
f a subsidiary of Greenfields Care Group Limited
g a subsidiary of Branas Isaf (Holdings) Limited
h a subsidiary of Branas Isaf Personal Development Centre Limited
i a subsidiary of Coveberry Limited
j a subsidiary of Outlook Fostering Services Limited
k a subsidiary of CareTech Foster Care Limited
l a subsidiary of Professional Integrated Care Services Limited
m a subsidiary of CareTech Fostering Holdings Limited
n a subsidiary of Spark of Genius Limited
o a subsidiary of Spark of Genius (Training) Limited
57 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements 14 Group undertakings  (continued)
Exemption from Audit by Parent Guarantee
The company, being the ultimate sole shareholder of its subsidiaries, has decided to take the exemption from audit of a number of subsidiaries 
for the year ended 30 September 2015 under Sections 479A and 479C of the Companies Act 2006 and the company will provide a guarantee 
for all the liabilities of those entities as at 30 September 2015 as detailed above with the exception of CareTech Community Services Limited, 
Hazeldene UK Limited, Spark of Genius Limited, Spark of Genius (Training) Limited, Trojan Spark Limited, Spark of Genius (North East) LLP and 
Dawn Hodge Associates Limited.
CareTech Community Services Limited as the main trading entity will not take the exemptions as stakeholders require audited financial 
statements to be produced. Hazeldene UK Limited and H2O Limited will not be covered by the parent company guarantee as they are 
incorporated in Gibraltar. 
15 Trade and other receivables
2015
£000
2014 
£000
Trade receivables (note 24) 7,193 5,700
Other debtors and prepayments 5,788 2,975
12,981 8,675
16 Cash and cash equivalents
2015  
£000
2014  
£000
Cash and cash equivalents per balance sheet 3,702 3,900
Cash and cash equivalents per cashflow statement 3,702 3,900
17 Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings. For more information about 
the Group’s exposure to interest rate risk, see note 24.
2015  
£000
2014  
£000
Non-current liabilities
Secured bank loans 154,716 158,605
Finance lease liabilities 5,587 2,206
160,303 160,811
Current liabilities
Secured bank loans – 7,593
Finance lease liabilities 1,927 1,629
1,927 9,222
Terms and debt repayment schedule 
Currency
Nominal
interest rate
(%)
Year of
maturity
Book value
2015
£000
Book value
2014
£000
Term loan £ 2.75 (2014: 3.25)
1
2019 126,699 129,462
Revolving credit facility term loan £ 2.75 (2014: 3.25)
1
2019 28,017 36,736
154,716 166,198
1   The margin on the facilities has initially been set at 2.75% over LIBOR but reduces based on the ratio of the Group’s net debt to EBITDA. The overall margin is 
expected to be 2.75% over LIBOR.
At 30 September 2015 the Group has available bank facilities totalling £195m, sufficient, with cashflow from profits, to fund present commitments. 
Term facilities are used to fund capital expenditure and short-term flexibility is achieved by the utilisation of cash resources.
The term loans are secured by way of a charge over certain assets, primarily property, plant and equipment of the Group.
Finance lease liabilities
Finance lease liabilities are payable as follows:
Minimum 
lease 
payments
2015
£000
Interest
2015
£000
Principal
2015
£000
Minimum 
lease 
payments
2014
£000
Interest
2014
£000
Principal
2014
£000
Less than one year 2,103 176 1,927 1,787 158 1,629
Between one and five years 5,923 336 5,587 2,646 440 2,206
8,026 512 7,514 4,433 598 3,835
58 CareTech Holdings PLC Annual Report and Accounts 2015
Notes to the Financial Statements
continued 18 Trade and other payables
2015
£000
2014
£000
Trade payables 3,552 3,473
Accrued expenses 13,368 11,169
16,920 14,642
19 Deferred tax assets and liabilities 
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
2015 2014
Assets  
£000
Liabilities  
£000
Assets  
£000
Liabilities  
£000
Property, plant and equipment 4,590 4,337
Intangible assets 13,728 13,303
Derivative financial instruments (158) 44
Share-based payments (131) – (119) –
Rolled-over gains on property, plant and equipment 3,037 3,037
Tax (assets)/liabilities (131) 21,197 (119) 20,721
Net of tax assets (131) (119) 
Net deferred tax liabilities 21,066 20,602
There are no unrecognised deferred tax assets or liabilities.
Movement in deferred tax during the year
1 October
2014
£000
Recognised
in income
£000
Acquired in
business
combination
£000
30 September
2015
£000
Property, plant and equipment 4,337 253 – 4,590
Intangible assets 13,303 (1,117) 1,542 13,728
Rolled-over gains 3,037 – – 3,037
Derivative financial instruments 44 (202) – (158)
Share-based payments (119) (12) – (131)
20,602 (1,078) 1,542 21,066
Movement in deferred tax during the previous year
1 October
2013
£000
Recognised
in income
£000
Acquired in
business
combination
£000
30 September
2014
£000
Property, plant and equipment 5,138 (801) – 4,337
Intangible assets 14,617 (1,314) – 13,303
Rolled-over gains 3,037 – – 3,037
Derivative financial instruments (66) 110 – 44
Share-based payments (359) 240 – (119)
22,367 (1,765) – 20,602
59 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements 20 Employee benefits
Defined contribution plans 
The Group operates a number of defined contribution pension plans.
The total expense relating to these plans in the current year was £589,000 (2014: £577,000) of which £37,000 (2014: £199,000) was 
outstanding at the year end.
Share-based payments 
The company continues to operate three share option schemes: The CareTech Holdings 2005 Approved Share Option Scheme (“The Approved 
Scheme”); the CareTech Holdings 2005 Unapproved Share Option Scheme (“The Unapproved Scheme”) and the CareTech Holdings 2005 
Share-Save Scheme (“the SAYE Scheme”).
In addition, a new Executive Shared Ownership Plan (“ExSOP”) was formed in 2012. Under the provisions of the ExSOP, shares (the “ExSOP 
shares”) are jointly owned by nominated senior employees and by an employees’ share trust. The ExSOP awards are subject to a time-related 
performance condition measured over a three-year period beginning with the date of the grant. To the extent the performance condition is 
satisfied, the participant can benefit from any growth of the share price in excess of the issue price.
The participant benefits either in jointly owned shares or a smaller proportion in their own name. The charge for the year of £60,000  
(2014: £50,000) relates entirely to the ExSOP Scheme.
Grant of the ExSOP scheme requires specific performance conditions being satisfied. These criteria are set out below;
(i)  The Share Price Target requires that the average mid-market closing price of a share should be no less than £2.49 during any period of  
30 consecutive business days during the three months immediately prior to the vesting date. 
EPS Target requires the growth in the company’s underlying Diluted EPS over the Performance Period to be at least 15% (being an average 
5% annual growth rate, calculated without compounding).
Approved and Unapproved scheme options are exercisable at any time from the third anniversary of the date of grant to the tenth anniversary, 
other than nominal cost options which may become exercisable at the earliest after a period of 30 dealing days following the third anniversary 
of being granted. SAYE scheme options are normally exercisable within six months following the third anniversary of the date of grant. 
Options granted under the above schemes, together with those remaining at 30 September 2015, are as follows:
Date of grant Scheme
Options
granted
Options
lapsed to
30 Sept
2015
Options
 exercised to
30 Sept
2015
Options
remaining
30 Sept
2015
Option price
(pence)
13 October 2005 Approved Scheme 627,375 (317,342) (265,665) 44,368 169
7 November 2005 SAYE Scheme 186,033 (43,519) (142,514) – 136
2 August 2006 Approved Scheme 52,427 (43,764) (3,424) 5,239 292
2 August 2006 Unapproved Scheme 8,220 (8,220) – – 292
17 January 2007 Approved Scheme 162,885 (116,855) (23,236) 22,794 345
17 January 2007 Unapproved Scheme 18,263 (10,103) (5,785) 2,375 345
21 March 2007 Approved Scheme 6,077 – – 6,077 452
1 February 2008 SAYE Scheme 101,397 (101,397) – – 440
2 May 2008 Approved Scheme 114,070 (84,454) (138) 29,478 410
2 May 2008 Unapproved Scheme 23,843 (19,278) – 4,565 410
14 April 2009 Unapproved Scheme 92,308 (92,308) – – 0.5
4 August 2009 Approved Scheme 191,121 (130,441) – 60,680 332.5
4 August 2009 Unapproved Scheme 165,050 (114,574) – 50,476 332.5
12 August 2009 SAYE Scheme 202,069 (157,390) (1,183) 43,496 254
3 August 2010 Approved Scheme 283,754 (194,309) – 89,445 305
3 August 2010 Unapproved Scheme 210,653 (149,577) – 61,076 305
3 August 2010 Unapproved Scheme 92,308 (92,308) – – 0.5
15 November 2010 Approved Scheme 8,108 – – 8,108 370
15 November 2010 Unapproved Scheme 18,243 – – 18,243 370
4 April 2012 Executive Shared Ownership Plan 1,608,337 (261,668) (435,879) 910,790 153.1
60 CareTech Holdings PLC Annual Report and Accounts 2015
Notes to the Financial Statements
continued 21 Share capital
2015  
£000
2014  
£000
Allotted, called up and fully paid:
62,133,535 (2014: 52,016,248) ordinary shares of 0.5p each 311 260
53,402 deferred shares of 0.5p each – –
311 260
Share capital represents the nominal (par) value of shares that have been issued. The holders of ordinary shares are entitled to receive dividends 
as declared from time to time and are entitled to one vote per share at meetings of the company. The deferred shares have no such rights.
Movements in the number of issued shares were as follows: 
2015
At 
1 October
 2014
Issued in
connection
with
acquisitions
Issued
following
share option
exercises Placing
At 
30 September 
2015
Ordinary shares of 0.5p each 52,016,248 100,000 17,287 10,000,000 62,133,535
Deferred shares of 0.5p each 53,402 – – – 53,402
2014
At 
1 October
 2013
Issued in
connection
with
acquisitions
Issued
following
share option
exercises Placing
At
30 September
2014
Ordinary shares of 0.5p each 52,007,328 – 8,920 – 52,016,248
Deferred shares of 0.5p each 53,402 – – – 53,402
Reserves
Share Premium Account – During the year, the issue of new shares charged to the share premium account are as follows:
2015  
£000
2014  
£000
Opening balance 1 October 2014 57,221 57,202
Premium on issue of shares 19,764 19
At 30 September 2015 76,985 57,221
Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are 
deducted from share premium, net of any related income tax benefits.
Merger reserve – The merger reserve represents the premium arising on the ordinary shares issued as consideration for the acquisition of 
shares in another company (merger relief).
Merger reserve
2015  
£000
2014  
£000
Opening balance 1 October 2014 8,498 8,498
Shares issued for Acquisition 250 –
At 30 September 2015 8,748 8,498
Further information relating to the EBT reserve of the Group is detailed in note 20 to the consolidated financial statements of the Group.
Retained earnings – Retained earnings includes all current and prior period retained profits and share-based employee remuneration. Dividend 
distributions payable to equity shareholders are included in other liabilities when the dividends have been approved in a general meeting prior 
to the reporting date.
22 Dividends 
The aggregate amount of dividends comprises:
2015
£000
2014  
£000
Interim dividend paid in respect of prior year but not recognised as liabilities in that year 1,350 2,430
Final dividend paid in respect of the prior year 2,803 –
Aggregate amount of dividends paid in the financial year 4,153 2,430
The aggregate amount of dividends proposed and not recognised as liabilities as at the year end is 8.40p per share, £5,226,404 (2014: 5.40p 
per share, £2,808,878).
61 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements 23 Business combinations
(a) Acquisitions 2015
The Group made two acquisitions in the year which have been accounted for as business combinations under IFRS3 (revised). In view of the 
overall value of acquisitions in the financial year, the Directors consider it appropriate to present the acquisitions information in aggregate.
The following table of fair values summarises the acquisitions made during the financial year:
Book values
£000
Fair value
adjustment
£000
Total
£000
Intangible assets – 4,762 4,762
Property, plant and equipment 2,421 2,921 5,342
Other fixed assets 70 – 70
Trade and other receivables 899 (150) 749
Cash 804 – 804
Trade and other payables (1,026) (100) (1,126)
Corporation tax (131) – (131)
Deferred income (748) (93) (841)
Deferred tax (6) (1,536) (1,542)
Debt (1,556) – (1,556)
Net assets on acquisition 727 5,804 6,531
Satisfied as follows:
Cash 7,395
Shares 250
Deferred consideration due within one year 1,500
9,145
Goodwill 2,614
On 28 July 2015, the Group acquired 100% of the equity of Spark of Genius Limited, an educational and residential provider for Young People. 
The book values attributable to the acquisition were £692,000 net assets and fair value adjustments were £5,529,000 resulting in goodwill 
arising on acquisition of £1,589,000.
On 31 July 2015, the Group acquired 100% of the equity of Dawn Hodge Associates Limited, an educational training provider. The book values 
attributable to the acquisition were £35,000 net assets and fair value adjustments were £275,000 resulting in goodwill arising on acquisition of 
£1,025,000. 
Each acquisition was undertaken to enhance the Group’s position in the respective industries. In each case control was obtained through the 
acquisition of share capital.
The book values of the assets and liabilities were extracted from the underlying accounting records of the acquired entities on the date of 
acquisition. The book value of receivables represents the gross contractual amounts receivable, all of which are considered recoverable. The 
fair value adjustments made to intangible assets and creditors are to reflect their value on a going concern market value basis. The fair value 
adjustment to deferred tax arises due to the requirement to recognise deferred tax and goodwill on the fair value uplifts to intangible assets and 
property, plant and equipment. The remaining goodwill of £2,614,000 relates to the assembled workforce and customer relationships acquired 
on acquisition.
Goodwill which is not expected to be tax deductible arises due to the requirement to recognise deferred tax in respect of the fair value 
adjustments to intangible assets and property, plant and equipment, together with synergies expected to arise from combining operations, 
workforce in place and other intangible assets which do not qualify for separate recognition.
(b) Reconciliation to Group Cash Flow
2015
£000
2014
£000
Cash consideration paid on acquisitions in the year 6,591 1,094
Cash consideration paid on previous year’s acquisitions – –
6,591 1,094
Deferred and contingent consideration payable is analysed as follows:
2015  
£000
2014  
£000 
Contingent consideration:
Due within one year 1,500 –
1,500 –
62 CareTech Holdings PLC Annual Report and Accounts 2015
Notes to the Financial Statements
continued 23 Business combinations  (continued)
(c) Proforma results
The underlying result for the combined entity for the year, as though the acquisition date for all business combinations had been the beginning 
of the year, is as follows:
2015  
£000
2014  
£000
Revenue 133,986 124,020
Operating profit 18,919 17,049
24 Financial instruments
The use of financial instruments is managed under policies and procedures approved by the Board. These are designed to reduce the financial 
risks faced by the Group, which primarily relate to credit, interest and liquidity risks, which arise in the normal course of the Group’s business.
Credit risk
Financial instruments which potentially expose the Group to credit risk consist primarily of cash equivalents and trade receivables. Cash 
equivalents are deposited only with major financial institutions that satisfy certain credit criteria.
Management has a credit policy in place and exposure to credit risk is monitored on an ongoing basis. Credit evaluations are carried out on all 
significant prospective customers and all existing customers requiring credit beyond a certain threshold. Varying approval levels are set on the 
extension of credit depending upon the value of the sale.
Where credit risk is deemed to have risen to an unacceptable level, remedial actions including the variation of terms of trade are implemented 
under the guidance of senior management until the level of credit risk has been normalised.
The Group provides credit to customers in the normal course of business with a provision for specific doubtful receivables. The balance includes 
the amounts considered recoverable which also equals their fair value. The Group does not require collateral in respect of financial assets. During 
the year there was a charge to the consolidated statement of comprehensive income for bad or doubtful debts of £nil (2014: £12,000).
At the balance sheet date, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the 
carrying amount of each financial asset. Based on past experience, the Group believes that no impairment allowance is necessary in respect  
of trade receivables not past due.
The trade receivables as at 30 September are aged as follows:
2015  
£000
2014 
£000
Not due 5,880 4,576
Not more than three months past due 1,313 1,124
More than three months but not more than six months past due – –
Trade receivables (note 15) 7,193 5,700
The movement in provisions for impairment of trade receivables are as follows:
£000
At 1 October 2013 800
Charged to the consolidated statement of comprehensive income 12
At 1 October 2014 812
Acquired with business combinations 150
Credited to the consolidated statement of comprehensive income (406)
At 30 September 2015 556
Interest rate risk
The Group finances its operations through called up share capital, retained profits, bank borrowings, and the sale of assets if appropriate.  
The Group’s income is by its nature relatively stable and its growth is, inter alia, impacted by inflation. Group policy is to balance interest rate 
fixes between the short, medium and long term. The benchmark rate for bank borrowings is LIBOR. As at 30 September, the Group carried  
five hedging instruments, details of which are as follows:
 – a 4½ year swap commencing 17 July 2012 at pre-determined amounts initially starting at £25 million at LIBOR fixed at 1.15%;
 – a 4½ year swap commencing 17 July 2012 at pre-determined amounts initially starting at £34 million at LIBOR fixed at 1.15%;
 – a 4½ year swap commencing 17 July 2012 at pre-determined amounts initially starting at £32 million at LIBOR fixed at 1.13%;
 – a 4½ year swap commencing 17 July 2012 at pre-determined amounts initially starting at £16 million at LIBOR fixed at 1.15%;
 – a 4½ year swap commencing 17 July 2012 at pre-determined amounts initially starting at £14 million at LIBOR fixed at 1.15%.
63 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements 24 Financial instruments  (continued)
Liquidity risk
The Group prepares annual cashflow forecasts reflecting known commitments and anticipated projects. Borrowing facilities are arranged as 
necessary to finance requirements. The Group has available bank facilities, sufficient with cashflow from profits, to fund present commitments. 
Term facilities are utilised to fund capital expenditure and short-term flexibility is achieved by the utilisation of cash resources in respect of 
financial liabilities. The following table indicates their contractual cashflow maturities:
2015
Effective
interest rate  
%
Carrying
amount
£000
Contractual
cashflows
£000
< 1 year
£000
1–5 years
£000
5 years
and over
£000
Trade and other payables (16,920) (16,920) (16,920) – –
Secured bank loans 5% (154,716) (191,477) (7,579) (183,898) –
Finance lease liabilities 11% (7,514) (7,514) (1,927) (5,587) –
Deferred and contingent consideration (1,500) (1,500) (1,500) – –
Derivative financial instruments (789) (789) (562) (227) –
(181,439) (218,200) (28,488) (189,712) –
2014
Effective
interest rate  
%
Carrying
amount
£000
Contractual
cashflows
£000
< 1 year
£000
1–5 years
£000
5 years
and over
£000
Trade and other payables – (14,642) (14,642) (14,642) – –
Secured bank loans 5% (166,198) (191,509) (16,691) (174,818) –
Finance lease liabilities 11% (3,835) (3,835) (1,629) (2,206) –
(184,675) (209,986) (32,962) (177,024) –
Capital risk management
The Group manages its capital to ensure that activities of the Group will be able to continue as a going concern whilst maximising returns for 
shareholders through the optimisation of debt and equity.
The Group’s capital structure is as follows:
2015  
£000
2014  
£000
Net debt (see page 44) 158,528 166,133
Equity (see page 42) 133,699 109,159
Our policy is to increase the total dividend per year broadly in line with the movement in underlying diluted earnings per share. The final 
dividend will therefore increase to 5.60p per share demonstrating a confident view of the Group’s fundamental strength.
Foreign currency risk
The Group operates entirely in the UK and is not exposed to any foreign currency risks.
Sensitivity analysis
In managing interest rate risks the Group aims to reduce the impact of short-term fluctuations on the Group’s earnings. Over the longer term, 
however, permanent changes in interest rates would have an impact on consolidated earnings.
At 30 September 2015, it is estimated that a general increase of 1% in interest rates would impact finance expense and decrease the Group’s 
profit before tax and equity by approximately £400,000 (2014: £450,000). Hedging instruments have been included in this calculation.
Fair values
The fair values together with the carrying amounts shown in the balance sheet are as follows:
Carrying 
amount
2015
£000
Fair 
value
2015
£000
Carrying 
amount
2014
£000
Fair 
value
2014
£000
Loans and receivables:
Cash at bank and in hand (note 16) 3,702 3,702 3,900 3,900
Trade receivables (note 15) 7,193 7,193 5,700 5,700
Amortised cost:
Trade payables (note 18) (3,552) (3,552) (3,473) (3,473) 
Secured bank loans (note 17) (154,716) (154,716) (166,198) (166,198)
Contingent consideration (note 23) (1,500) (1,500) – –
Held at fair value through profit and loss:
Derivative financial instruments (789) (789) 156 156
64 CareTech Holdings PLC Annual Report and Accounts 2015
Notes to the Financial Statements
continued 24 Financial instruments  (continued)
Where market values are not available, fair values of financial assets and liabilities have been calculated by discounting expected future 
cashflows at prevailing interest rates with the following assumptions being applied:
 – for trade and other receivables and payables with a remaining life of less than one year the carrying amount is deemed to reflect the fair value;
 – for cash and cash equivalents the amounts reported on the balance sheet approximates to fair value;
 – for secured bank loans at floating rate the carrying value is deemed to reflect the fair value as it represents the price of the instruments in the market place; 
 – for finance lease liabilities, all amounts are due within five years and are on terms similar to those estimated to be achievable in the market;
 – for the derivatives financial instruments, these were entered into to manage the Group’s exposure to interest rate risk on its external 
borrowings; and
 – for contingent consideration, this was entered into as part of the acquisition of Spark of Genius. The fair value will be determined with 
reference to Spark of Genius’s EBITDA performance over the four financial years ending 30 September 2019.
Fair value hierarchy
The financial instruments carried at fair value by valuation method are analysed as follows:
 – Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities: £nil (2014: £nil).
 – Level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or liability either as a direct price or 
indirectly derived from prices: liability £789,000 (2014: asset £156,000).
 – Level 3 – inputs for the asset or liabilities that are not based on observable market data: liability £1,500,000 (2014: £nil).
25 Operating leases
Non-cancellable operating lease rentals are payable as follows:
2015 2014
Land and 
buildings
£000
Other
£000
Land and 
buildings
£000
Other
£000
Within one year 3,075 302 2,951 136
Between two and five years 6,824 166 5,422 34
More than five years 7,770 – 8,623 –
17,669 468 16,996 170
During the year the following was recognised as an expense in the consolidated statement of comprehensive income in respect of operating leases:
2015 2014
Land and 
buildings
£000
Other
£000
Land and 
buildings
£000
Other
£000
Charge for amounts currently payable 2,727 364 2,426 786
Onerous lease provision 304 – – –
Total recognised in the consolidated statement of comprehensive income 3,031 364 2,426 786
Analysis of movement in onerous lease provision
£000
At 1 October 2014 –
Recognised in statement of comprehensive income 736
Utilised in the year (316)
At 1 October 2014 420
Onerous lease provision 304
Settled in period (724)
At 30 September 2015 –
26 Related parties
During the year, CareTech Community Services Limited paid rent totalling £188,000 (2014: £184,000) in respect of properties in which F. Sheikh 
and H. Sheikh have an interest. At the year end rent of £85,000 (2014: £46,000) was outstanding. Dividends paid to Directors in the year totalled 
£83,000 (2014: £47,000).
Transactions with key management personnel
2015
£000
2014
£000
Salary 2,036 2,111
Benefits 181 206
Bonus 114 269
Total short-term remuneration 2,331 2,586
Post employment benefits – –
Share-based payments – –
2,331 2,586
Key management personnel are defined as Directors of the company and members of the Senior Management Team.
Directors’ emoluments are set out on page 38.
65 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements Share
capital
£000
Share
premium
£000
Merger
reserve
£000
Retained
earnings
£000
Total
equity
£000
At 1 October 2013 260 57,202 8,498 17,557 83,517
Loss for the year – – – (8,639) (8,639)
Total comprehensive income – – – (8,639) (8,639)
Issue of shares – 19 – – 19
Dividends (2,430) (2,430)
Transactions with owners recorded directly in equity – 19 – (2,430) (2,411)
At 30 September 2014 260 57,221 8,498 6,488 72,467
At 1 October 2014
Profit for the year – – – 7,299 7,299
Total comprehensive income – – – 7,299 7,299
Issue of shares 51 19,764 250 – 20,065
Dividends – – – (4,153) (4,153)
Transactions with owners recorded directly in equity 51 19,764 250 (4,153) 15,912
At September 2015 311 76,985 8,748 9,634 95,678
66 CareTech Holdings PLC Annual Report and Accounts 2015
Company Statement of Changes in Equity
as at 30 September 2015 Note
2015
£000
2014
£000
Non-current assets
Investments 29 35,301 35,301
35,301 35,301
Current assets
Trade and other receivables 30 216,811 205,965
Cash and cash equivalents 520 29
217,331 205,994
Total assets 252,632 241,295
Current liabilities
Loans and borrowings 31 – 8,550
Trade and other payables 32 2,238 2,393
2,238 10,943
Non-current liabilities
Loans and borrowings 31 154,716 157,885
154,716 157,885
Total liabilities 156,954 168,828
Net assets 95,678 72,467
Equity
Share capital 33 311 260
Share premium 76,985 57,221
Merger reserve 8,748 8,498
Retained earnings 9,634 6,488
Total equity attributable to equity shareholders of the parent 95,678 72,467
These financial statements were approved by the Board of Directors on 20 January 2016 and were signed on its behalf by:
  
Farouq Sheikh  Michael Hill
Chairman  Finance Director
Company number: 04457287
67 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements
Company Balance Sheet
as at 30 September 2015 2015
£000
2014
£000
Cashflows from operating activities
Profit/(Loss) for the year 7,299 (8,639)
Operating cashflows before movement in working capital 7,299 (8,639)
Movement in payables (155) 1,288
Movement in intercompany balance (10,846) 14,452
Net cash (used in)/generated from operating activities (3,702) 7,101
Cashflows from investing activities
Acquisition of subsidiaries, net of cash acquired – –
Cashflows from financing activities
Proceeds from new loan (net of costs) – 2,179
Dividends paid (4,153) (2,430)
Proceeds from the issue of new shares (net of costs) 20,065 19
Repayment of borrowings (11,719) (6,950)
Net cash generated/(used in) from financing activities 4,193 (7,182)
Net increase/(decrease) in cash and cash equivalents 491 (81)
Cash and cash equivalents at 1 October 29 110
Cash and cash equivalents at 30 September 520 29
68 CareTech Holdings PLC Annual Report and Accounts 2015
Company Cash Flow Statement
for the year ended 30 September 2015 (f) Taxation
Tax on the profit or loss for the year comprises current and deferred 
tax. Tax is recognised in retained earnings except to the extent that it 
relates to items recognised directly in equity, in which case it is 
recognised in equity.
Current tax is the expected tax payable on the taxable income for 
the year, using tax rates enacted or substantively enacted at the 
balance sheet date, and any adjustment to tax payable in respect 
of previous years.
(g) Revenue
Revenue represents management fees receivable, in respect of the 
period to which management services relate.
(h) Share-based payments
The share option programme allows employees to acquire shares of 
the company. The fair value of options granted is recognised as an 
employee expense with a corresponding increase in equity. The fair 
value is measured at grant date and spread over the period during 
which the employees become unconditionally entitled to the options. 
The fair value of the options granted is measured using an option 
pricing model, taking into account the terms and conditions upon 
which the options were granted. The amount recognised as an 
expense is adjusted to reflect the actual number of share options that 
vest except where forfeiture is only due to share prices not achieving 
the threshold for vesting.
Where the company grants options over its own shares to the 
employees of its subsidiaries it recognises an increase in the cost of 
investment in its subsidiaries equivalent to the equity settled share-
based payment charge recognised in its subsidiary’s financial 
statements with the corresponding credit being recognised directly 
in equity.
(i) Dividends on shares presented within shareholders’ funds
Dividends unpaid at the balance sheet date are only recognised as a liability 
at that date to the extent that they are appropriately authorised and are no 
longer at the discretion of the company. Unpaid dividends that do not 
meet these criteria are disclosed in the notes to the financial statements.
27 Accounting policies
(a) Basis of preparation
The financial statements of the company have been prepared and 
approved by the Directors in accordance with International Financial 
Reporting Standards as adopted by the EU (“Adopted IFRSs”).
Under section 408 of the Companies Act 2006 the company is exempt 
from the requirement to present its own comprehensive statement of 
income. The profit for the year dealt with in the financial statements of 
the company was £7,299,000 (2014: £8,639,000 loss).
(b) Investments
Investments in subsidiary undertakings are stated in the balance  
sheet of the company at cost less impairment written off.
(c) Cash and liquid resources
Cash, for the purpose of the cashflow statement, comprises cash 
in hand and deposits repayable on demand, less overdrafts payable 
on demand.
(d) Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value 
less directly attributable transaction costs. Subsequent to initial 
recognition, interest-bearing borrowings are stated at amortised cost 
with any difference between proceeds (net of transaction costs) and 
the redemption value being recognised in the consolidated statement 
of comprehensive income over the period of the borrowings on an 
effective interest basis.
Borrowings are classified as current liabilities unless the company has 
an unconditional right to defer settlement of the liability for at least 12 
months after the reporting date.
(e) Financial instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when the 
company becomes a party to the contractual provisions of the 
financial instrument and are measured initially at fair value adjusted by 
transactions costs, except for those carried at fair value through profit 
or loss which are measured initially at fair value.
Financial assets are derecognised when the contractual rights to 
the cashflows from the financial asset expire, or when the financial 
asset and all substantial risks and rewards are transferred. A financial 
liability is derecognised when it is extinguished, discharged, cancelled 
or expires.
69 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements
Company Notes 28 Dividends 
The aggregate amount of dividends comprises:
2015
£000
2014
£000
Interim dividend paid in respect of prior year but not recognised as liabilities in that year 1,350 2,430
Final dividend paid in respect of the prior year 2,803 –
Aggregate amount of dividends paid in the financial year 4,153 2,430
The aggregate amount of dividends proposed and not recognised as liabilities as at the year end is 8.40p per share, £5,226,404 (2014: 5.40p 
per share, £2,808,878).
29 Investments
Shares
in Group
undertakings
£000
Cost and net book value
At beginning of year 35,301
Share-based payments charge in respect of subsidiary undertakings –
At end of year 35,301
30 Trade and other receivables
2015
£000
2014
£000
Amounts owed by Group undertakings 216,811 205,965
31 Interest-bearing loans and borrowings
This note provides information about the contractual terms of the company’s interest-bearing loans and borrowings. For more information 
about the Group’s exposure to interest rate risk, see note 24.
2015
£000
2014
£000
Non-current liabilities
Secured bank loans 154,716 157,885
2015
£000
2014
£000
Current liabilities
Current portion of secured bank loans – 8,550
Terms and debt repayment schedule
Currency
Nominal  
interest rate (%)
Year of
maturity
Book value
2015
£000
Book value
2014
£000
Term loan £ 2.75 (2014: 3.25)
1
2019 126,699 129,646
Revolving credit facility term loan £ 2.75 (2014: 3.25)
1
2019 28,017 36,789
154,716 166,435
1  The margin on the new facilities has initially been set at 2.75% over LIBOR but reduces after that based on the ratio of the Group’s net debt to the EBITDA.  
The overall margin is expected to be 2.75% over LIBOR.
At 30 September 2015 the Group has available bank facilities totalling £195m, sufficient, with cashflow from profits, to fund present 
commitments. Term facilities are used to fund capital expenditure and short-term flexibility is achieved by the utilisation of cash resources.
The term loans are secured by way of a charge over certain assets of the Group.
32 Trade and other payables
2015
£000
2014
£000
Other creditors 2,238 2,393
70 CareTech Holdings PLC Annual Report and Accounts 2015
Company Notes
continued 33 Called up share capital
2015
£000
2014
£000
Allotted, called up and fully paid:
62,133,535 (2014: 52,016,248) ordinary shares of 0.5p each 311 260
53,402 deferred shares of 0.5p each – –
311 260
The holders of the ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of 
the company. The deferred shares have no such rights.
Details in respect of the reserves are given in note 21 to the Group financial statements.
34 Employee benefits
Defined contribution plans
The company operates a number of defined contribution pension plans.
The total company expense relating to these plans in the current year was £nil (2014: £nil).
Share-based payments
There was no expense for share-based payments relating to the company in the year (2014: £nil).
The grants and related accounting treatment adopted by the company is identical to that operated by the Group under IFRS 2 “share-based 
payments” (see note 20.)
35 Directors’ remuneration
The analysis of Directors’ emoluments and share options is included within the Remuneration Report on pages 37 and 38. This analysis forms 
part of these financial statements.
36 Staff numbers and costs
The company has no employees (2014: none) other than the Directors. Directors’ emoluments are paid by a subsidiary undertaking.
37 Related parties
During the year the company received dividends of £10,200,000 (2014: £nil) and received interest of £6,300,000 (2014: £nil) and fees of £70,000  
(2014: £70,000) from its subsidiary undertakings. The amount due to the company from its subsidiary undertakings amounted to £216,811,000  
(2014: £205,965,000).
38 Financial instruments
The use of financial instruments is managed under policies and procedures approved by the Board. These are designed to reduce the financial 
risks faced by the company, which primarily relate to credit, and liquidity risks, which arise in the normal course of the company’s business.
Credit risk
Management has a credit policy in place and exposure to credit risk is monitored on an ongoing basis. The company provides credit to subsidiaries in the 
normal course of business. The balance includes the amounts considered recoverable which also equals to their fair value. The company has collateral 
in respect of the investments it holds in its subsidiary undertakings. During the year there was no charge to the income statement for bad or doubtful 
debts (2014: £nil).
At the balance sheet date, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying 
amount of each financial asset.
The receivables as at 30 September are inter-company balances as follows:
2015
£000
2014
£000
Not due 216,811 205,965
Not more than three months past due – –
More than three months but not more than six months past due – –
More than six months past due – –
Trade receivables (note 30) 216,811 205,965
The fair values of these balances is equal to their carrying value.
Interest rate risk
The company finances its operations through called up share capital, retained profits, bank borrowings, and the sale of assets if appropriate. 
Group policy is to balance interest rate fixes between the short, medium and long term. The benchmark rate for bank borrowings is LIBOR.
71 CareTech Holdings PLC Annual Report and Accounts 2015
Strategic Review Governance Financial Statements 38 Financial instruments (continued) 
Liquidity risk
The company prepares annual cashflow forecasts reflecting known commitments and anticipated projects. Borrowing facilities are arranged  
as necessary to finance requirements. The company has available bank facilities, sufficient, with cashflow from profits, to fund present 
commitments. Term facilities are utilised to fund capital expenditure and short-term flexibility is achieved by the utilisation of cash resources 
in respect of financial liabilities, the following table indicates their contractual cashflow maturities.
2015
Effective 
interest rate
%
Carrying
amount
£000
Contractual
cashflows
£000
< 1 year
£000
1–5 years
£000
5 years
and over
£000
Trade and other payables – (2,238) (2,238) (2,238) – –
Secured bank loans 5% (154,716) (191,477) (7,579) (183,899) –
(156,954) (193,715) (9,817) (183,899) –
2014
Effective 
interest rate
%
Carrying
amount
£000
Contractual
cashflows
£000
< 1 year
£000
1–5 years
£000
5 years
and over
£000
Trade and other payables – (2,393) (2,393) (2,393) – –
Secured bank loans 5% (166,435) (191,784) (16,703) (175,081) –
(168,828) (194,177) (19,096) (175,081) –
Capital risk management
The company manages its capital to ensure that activities of the company will be able to continue as a going concern whilst maximising 
returns for shareholders through the optimisation of debt and equity.
The company’s capital structure is as follows:
2015
£000
2014
£000
Net debt 154,196 166,406
Equity 95,678 72,467
Our policy is to increase the total dividend per year broadly in line with the movement in underlying diluted earnings per share. The final 
dividend will therefore increase to 5.60p per share demonstrating a confident view of the Group’s fundamental strength.
Foreign currency risk
The company operates entirely in the UK and is not exposed to any foreign currency risks.
Sensitivity analysis
In managing interest rate risks the company aims to reduce the impact of short-term fluctuations on the company’s earnings and equity. 
Over the longer term, however, permanent changes in interest rates would have an impact on consolidated earnings and equity.
At 30 September 2015 it is estimated that a general increase of 1% in interest rates would impact finance expense and decrease the company’s 
profit before tax and equity by approximately £400,000 (2014: £450,000). Hedging instruments have been included in this calculation.
Fair values
The fair values together with the carrying amounts shown in the balance sheet are as follows:
Carrying 
amount
2015
£000
Fair 
value
2015
£000
Carrying 
amount
2014
£000
Fair 
value
2014
£000
Loans and receivables:
Cash at bank and in hand 520 520 29 29
Trade receivables (note 30) 216,811 216,811 205,965 205,965
Amortised cost:
Other payables (note 32) (2,238) (2,238) (2,393) (2,393)
Secured bank loans (note 31) (154,716) (154,716) (166,435) (166,435)
Where market values are not available, fair values of financial assets and liabilities have been calculated by discounting expected future 
cashflows at prevailing interest rates with the following assumptions being applied:
 – for trade and other receivables and payables the carrying amount is deemed to reflect the fair value;
 – for cash and cash equivalents the amounts reported on the balance sheet approximates to fair value; and
 – for secured bank loans at floating rate the carrying value is deemed to reflect the fair value as it represents the price of the instruments  
in the market place.
72 CareTech Holdings PLC Annual Report and Accounts 2015
Company Notes
continued Nominated Adviser and Joint Broker
Panmure Gordon (UK) Limited
One New Change
London EC4M 9AF
Joint Brokers
WH Ireland
24 Martin Lane
London EC4R 0DR
Auditor
Grant Thornton UK LLP
202 Silbury Boulevard
Milton Keynes
MK9 1LW
Solicitors
Charles Russell Speechlys
5 Fleet Place
London EC4M 7RD
Pinsent Masons
30 Crown Place
London EC2A 4ES
Bankers
The Royal Bank of Scotland PLC
280 Bishopsgate
London EC2M 4RB
Lloyds Bank PLC
Large Corporate
25 Gresham Street
London EC2V 7HN
Alliance & Leicester PLC
Santander Corporate Banking
2 Triton Square
Regents Place
London NW1 3AN
AIB Group (UK) PLC
Corporate Banking
9/10 Angel Court
London EC2R 7AB
Registrars
Capita Asset Services
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
West Yorkshire HD8 0GA
Company Number
04457287
Registered Office
5th Floor, Metropolitan House
3 Darkes Lane
Potters Bar
Hertfordshire EN6 1AG
Directors
Farouq Sheikh (Executive Chairman)
Haroon Sheikh (Chief Executive Officer)
Michael Hill (Group Finance Director)
Karl Monaghan (Non-Executive Director)
Mike Adams (Non-Executive Director)
Jamie Cumming (Non-Executive Director)
Company Secretary
Michael Hill
Directors and Advisers
73 CareTech Holdings PLC Annual Report and Accounts 2015
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