every day
Extraordinary
days
Annual Report  
and Accounts 2014
CareTech Holdings PLC Annual Report and Accounts 2014 Extraordinary days every day Purpose
An established, reputable and innovative 
social care provider, the CareTech family  
of companies offer a comprehensive  
and complete outsourcing provision  
for social care commissioners.
Serving the high acuity social care 
population we deliver safe, reliable 
support to children and adults through  
a range of service options and provide 
solutions that are both individual and  
tailor made to each of our service users.
We provide care and support 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 
support options.
Our children services cover assessment, 
residential care, education and fostering 
options, including specialist provision for 
very complex young people. We 
carefully and professionally support  
any child irrespective of their reasons for 
being in public care. One of our national 
specialities is 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.
We provide transition services for young 
people leaving children services as they 
enter adult care and for adults who are 
making the move into their own home  
after a lifetime in care settings.
For many years we have had staff 
undertaking apprenticeships through 
third-party providers and we now  
offer care apprenticeships and 
pre-employment training ourselves.
Front cover: Our client Sadie McMorran being taught carpentry.
Focusing on safe reliable care  
we deliver exceptional standards of 
high quality individual support ensuring 
that our service users experience 
extraordinary days, every day. Contents
 Strategic Review
1 Highlights
2 Group at a glance
8 Chairman’s Statement
10 Strategic Report
18  Chief Executive’s Statement  
and Performance Review
24 Financial Review
 Governance
28 Board of Directors
30 Corporate Governance Report
33 Directors’ Report 
35 Remuneration Report 
37  Statement of Directors’ Responsibilities 
in respect of the Annual Report and  
the Financial Statements
 Financial Statements
38  Independent Auditor’s Report to the 
members of CareTech Holdings PLC
39  Consolidated Statement of 
Comprehensive Income  
40 Consolidated Balance Sheet
41  Consolidated Statement of Changes  
in Equity
42 Consolidated Cash Flow Statement
43 Notes  to the Financial Statements
68  Company Statement of Changes  
in Equity
69 Company Balance Sheet  
70 Company Cash Flow Statement
71 Company Notes
76 Directors and Advisers
Financial and Operational Highlights
£123.3m
Revenue 
increased by 7.9% (2013: £114.3m)
£19.7m
Underlying profit before tax
(ii)
 
increased by 12.6% (2013: £17.5m)
£30.3m
Cash inflows from operating activities  
before non-underlying items 
(2013: £23.9m) with net debt of £166.1m  
(2013: £168.5m)
£275m
Property portfolio 
independently valued
£30.7m
Underlying EBITDA
(i)
 
increased by 16.2% (2013: £26.4m)
31.01p
Underlying diluted earnings per share
(ii)
 
increased by 13.1% (2013: 27.43p)
2,074 places
Overall care capacity reduced by 42
(iv)
 
(2013: 2,116)
5.40p
Final dividend per share 
increased by 15.4% (2013: 4.68p)
Statutory Financial Highlights
£28.3m
EBITDA
(v)
 
Decreased by 29% (2013: £39.9m)
23.85p
Diluted earnings per share 
Decreased by 50% (2013: 47.54p)
(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 reduced by 42 reflecting the 
net of 63 additional beds less 12 beds withdrawn for 
reconfiguration, 30 places less in small supported 
living packages and 63 reduction for carers not 
currently accepting children.
(v) These statutory highlights have decreased  
following a non-recurring significant increase  
in 2013 as a result of the business activity in  
the year.
£20.5m
Operating profit
(v)
 
Decreased by 38% (2013: £32.9m)
£26.1m
Cash inflows from operating activities  
after non-underlying items 
(2013: £21.6m)
Strategic Review Governance Financial Statements
1 CareTech Holdings PLC Annual Report and Accounts 2014 Meeting the demands of the UK social care market
We have national coverage in a highly fragmented UK social care market. The total market  
value is now estimated, using an updated model (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
The care and support of people who  
have learning disability has evolved over  
the past decade into a broad division 
between those people requiring specialist 
and more sophisticated support and those 
who can be helped to live independently. 
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.
Although at a slow rate of change, adults 
with learning disabilities are increasingly 
being provided with direct funding to 
enable them to purchase their own care 
and support. We already work with service 
users to deliver self-directed support 
packages and see this as an important 
aspect of our service model.
For many people, and especially those 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 towards a more enabling, modern 
type of service. We increasingly offer 
several types of supported living and 
packages of individualised self-directed 
support to people in their own homes.
Foster Care
“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 commonly recognised  
as the best care solution for “looked after” 
children. Except in special circumstances, 
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 small 
supportive groups across the UK. Provision 
includes a highly respected service for 
physically and intellectually disabled 
children as well as support for children  
with sensory impairments. However, not  
all complex or disadvantaged children  
need to come into care and there are  
many good reasons why they should be 
supported and monitored in the own family 
homes. We provide foster care family 
assessments and ongoing support to 
children who remain with their birth 
families and in their family home.
Mental Health
The OECD recently published a report 
stating that mental Illness accounts for 4.5% 
of the UK GDP or approximately £70bn 
each year. NHS budgets for intervention  
in mental illness are stretched and they 
increasing rely on early discharge of 
patients to reduce cost.
CareTech’s mental health development  
team works in partnerships with the NHS  
and social service departments to ensure  
a successful transition out of acute care, 
delivering pathways to ordinary life. We  
also have an outstanding track record for 
diverting people away from acute care  
and supporting them in their own homes.  
For many people mental health long  
stay hospitals were a place of refuge but 
that opportunity is now long gone. Those 
same people are increasingly finding 
themselves within the criminal justice 
system and often as members of the 
long-term prison population. It is in 
everyone’s interest that those people with 
ongoing low-level mental health conditions 
return to an ordinary community life with 
the support that they need to make a 
positive contribution to society. CareTech’s 
highly effective care teams are developing 
new ways to offer support under these 
circumstances and we believe that this  
will be an important growth platform in 
years to come.
2 CareTech Holdings PLC Annual Report and Accounts 2014
Caring every day
Adult Services Children Services
Group at a glance
Five specialist operating divisions Young People Residential Services
While foster care remains the best choice  
for a majority of looked after children,  
a significant number of children and  
young people need to live for a while  
in specialised residential services.
There is a wide range of reasons for this  
and of course many different styles of care  
that are required. These services are highly 
intensive operations with exceptional staff 
ratios and generally include on site or 
dedicated educational facilities. Consequently 
they are necessarily high cost services where 
we aim for an intensive programme 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.
Learning Services
This Government and previous ones have 
paid great attention to unemployment, 
especially among young people. Several years 
ago we saw a return to the apprenticeship 
model for re-skilling the workforce and 
driving higher vocational and educational 
standards amongst young adults.
Within the Care Sector we recognised that a 
poorly skilled workforce was getting in the way 
of top quality care so CareTech had already 
invested in a first class training division with 
award winning programmes to develop our 
care staff.
The opportunity to acquire the majority of the 
trade and assets of Elmfield Training Limited gave 
the Group our new Learning Division which has 
already made an impact in care and beyond. 
It trades as EQL Solutions Limited.
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). We 
have less reliable numbers for the children 
services workforce but EQL solutions has 
already begun to recruit apprentices within 
CareTech’s own Children Services Division.
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 has significant 
market presence in social care and is  
well positioned to support both smaller 
companies as well as corporate providers.
In the 2012/13 academic year there  
were 510,000 apprenticeship starts. This  
is 10,000 less than the number of starts in  
the 2011/12 academic year, but 231,000 
more than in the 2009/10 academic year. 
A much higher proportion of apprenticeship 
starters are now aged over 25 (45% in 
2012/13) compared with 2009/10 (18%)  
and years previous to this. 
The majority of people starting apprenticeships 
choose frameworks in the service sectors, such 
as business administration and retail. However, 
there is a recognised need within the care 
sector that has not yet been developed. 
The majority of apprenticeship starters  
were female (55%) and there is a widespread 
commitment to address this as a failing  
within the historical approach.
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 (2014/15) academic year.
A day at the seaside collecting litter!!!
Strategic Review Governance Financial Statements
3 CareTech Holdings PLC Annual Report and Accounts 2014 Cooking at St Agnalls.
Pioneering 
every day
4 CareTech Holdings PLC Annual Report and Accounts 2014
Group at a glance 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 Learning Disabilities
Care capacity 2014
1,450
2013: (1,423)
Mental Health
Care capacity 2014
151
2013: (161)
Foster Care 
Care capacity 2014
320
2013: (383)
Young People Residential Services
Care capacity 2014
153
2013: (149)
Learning Services
Adult Services
Social care services for adults over the age of 18
Children Services
Social care services for children and Young People up to the age of 18
Split by:
 – Residential care 
 – Independent supported living 
 – Community support services
Split by:
 – Residential care 
 – Independent supported living 
 – Community outreach
Split by:
 – Residential care of children and young people 
 – Family Assessments in the home 
Split by:
 – Residential care of children and young people 
 – Education services for children and  
young people
Split by:
 – Pre-employment programmes
 – Development programmes
 – Apprenticeships
Strategic Review Governance Financial Statements
5 CareTech Holdings PLC Annual Report and Accounts 2014 Musical day at the Martello Centre.
Building 
relationships 
every day
6 CareTech Holdings PLC Annual Report and Accounts 2014
Group at a glance 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 most social workers will prefer to place people 
in the care of organisations that they can rely on and we work hard to sustain those relationships 
through the difficult environment of local authority austerity.
Quality and Expertise 
Quality is not simply compliance with the requirements of regulation, though that  
remains important. The CareTech way 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.
Innovative Care Pathway 
CareTech was one of the first care organisations to describe its approach as a Care Pathway. We have 
delivered many practical innovations such as the transitions programme and new approaches to the 
support of people moving into their own home. Currently we are developing modern and thoughtful 
solutions to self-directed and client determination that will set the pattern for progressive social care.
Strong Brand 
There are many providers offering care and support. Many are small innovative companies while 
others are large and anonymous. In CareTech we offer a sound, reliable service with the benefits  
of scale, operating within friendly and trusted local service businesses.
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.
Strategic Review Governance Financial Statements
7 CareTech Holdings PLC Annual Report and Accounts 2014 I am pleased to present our Annual Report 
and results for the year ending 30 September 
2014. Once again I can report on strong 
growth on all of our key business metrics.  
The successful pursuit of our business  
and social care strategies lead to a solid 
foundation for further development as  
we enter our 22nd year of public service.
The CareTech Group has earned an  
enviable standing as a safe, consistent  
and stable partner for local authorities and 
health commissioners as they increasingly  
outsource care services for which they  
have a legal duty. 
The Health and Social Care Information 
centre shows that overall local government 
spending remained the same as the past year 
and that the average cost of caring for adults 
has remained virtually unchanged. Spending 
on adults with learning disability has shown  
a small increase.
However, we are seeing an important 
realignment in the pattern of funding on 
social care with increased spending on those 
people with higher acuity levels, CareTech’s 
speciality, and a compensatory reduction of 
funding for people with less complex issues. 
Spending on “looked after” children shows  
a steady and consistent increase.
This pattern is in line with our expectation  
and confirms our strategic approach to remodel 
provisions to increase capacity at the more 
complex end of our client groupings.
In addition, we have seen growth in the  
drive toward more personalised service 
delivery and purchasing power being 
transferred to clients by way of Direct 
Payments. We see this as a significant 
development and one that will determine 
the pattern for longer term commissioning.  
In anticipation of this change, our 
management team has set in motion a  
very progressive shift toward the principles  
of personalisation in line with Government 
and local commissioner policies. This puts  
us in a good position to ensure continuing  
growth of our businesses and an increase  
in market share.
Dividend
The Group’s 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 2014 was 13.1% so the Board 
has proposed a final dividend of 5.40p (2013: 
4.68p) per share bringing the total dividend  
for the year to 8.00p (2013: 7.00p) per share. 
The final dividend will be paid, subject to 
shareholder approval, on 11 May 2015, with  
an ex-dividend date of 5 March 2015 and an 
associated record date of 6 March 2015.
Our Board
On 27 September 2014 Stewart Wallace, 
Executive Director, retired from the Board and 
Care Governance and Safeguarding Committee 
on reaching the age of 65. No further changes 
have occurred to the Board, Remuneration 
Committee, Care Governance and Safeguarding 
Committee or Audit Committee.
It is intended that Stewart will continue to provide 
input to the Company on an advisory basis.
I am immensely grateful to Stewart for his  
key role in the development of the Group’s 
services over the past 14 years. 
Mike Adams, a Non-Executive Director and 
Chair of the Care Governance and Safeguarding 
Committee, has recently been awarded an 
Honorary Doctor of Education for disability 
leadership from Anglia Ruskin University.
Our People
The Group’s divisional structure has been further 
developed with the two business segments of 
Adult services and Children Services having 
underneath them the five Care Pathways.
I am extremely grateful to all of our managers 
and front-line colleagues for their exceptional 
commitment during the year. They have 
continued to deliver top quality services 
despite the pressure being placed on us  
from social services to reduce costs.
Our continuing growth, measurable success 
and forward-looking approach is a tribute  
to the hard work and dedication of staff and 
managers throughout the organisation. I am 
very grateful for the outstanding contribution 
of our support teams and administrators as 
much as the more obvious contribution of 
our front line colleagues.
Farouq Sheikh 
Chairman
8 CareTech Holdings PLC Annual Report and Accounts 2014
Chairman’s Statement
A year of 
further progress I thank all of them for ensuring that we  
maintain the right balance between care  
and commercial sense.
I am very positive about the coming year  
and the opportunities it will bring. We shall  
see the consolidation of our current 
developments, new ideas coming through 
our staff and management engagement 
programmes in addition to the systematic 
growth of mainstream services that have 
served us well over the years.
Outlook and Prospects
The underlying performance of our business  
is strong and underpinned by demographic 
trends within our target markets. Improvements 
in the regulatory regime, commissioner 
attitudes and policy development favour  
growth for the best providers across the  
whole social care spectrum.
We see a particular opportunity with mental 
health where the level of historic underfunding 
is now being addressed and we are quite 
excited about the proposed merger of health 
and social care budgets which has won all the 
support of all political parties. In our view this 
will drive a better operating environment and 
enlarge the commercial opportunity for larger 
providers operating a comprehensive model  
of care.
In our view, the coming election year will give 
additional emphasis on under spending across 
the health and social care environment. There 
will be new opportunities for ambitious providers 
who are ready to work in partnership with 
commissioners to deliver creative solutions that 
will drive better value for the available resources. 
We believe that our robust infrastructure and 
strong management team are well placed to 
deliver the solutions that commissioners want.
Farouq Sheikh
Chairman
14 January 2015 
EQL staff training apprentices.
9 CareTech Holdings PLC Annual Report and Accounts 2014
Strategic Review Governance Financial Statements The Care Market in which the Group operates is a UK Market worth £15bn per annum  
across the four specialist operating divisions of Adult Learning Disabilities, Mental Health,  
Young People Residential Services and Foster Care.
Our Market
CareTech has national coverage in a  
highly fragmented UK social care market. 
The total market value is now estimated, 
using an updated model (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.
Number of Looked After in England are 
Local Authority Statistics at 31 March 
annually and are issued by the Department 
for Education (https://www.gov.uk/
government/statistics/children-looked-
after-in-england-including-adoption--2)
The market is growing in value by 5.5% 
per annum.
Our new division, 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). We have less 
reliable numbers for the children services 
workforce but EQL Solutions has already 
begun to recruit apprentices within 
CareTech’s own Children Services division.
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 
has significant market presence in social 
care and is well positioned to support  
both smaller companies as well as 
corporate providers.
Social workers are quick to tell us that 
value for them and their clients is the 
ability to deliver agreed and tangible 
outcomes at the best possible price.  
We have found that they are happy to  
fund at a commercial rate if they can be 
confident that a provider is able to deliver 
the required outcomes and move their 
client along the Care Pathway to a less 
expensive provision. This suits the 
CareTech approach, as a national provider 
with services that range from the intensive 
therapeutic model right down to minimum 
community support using skilled care 
workers. Delivering this high value 
approach, along with safe and high  
quality care ensures our position as  
a leading provider with loyal and  
reliable commissioners.
Adult Services
Adult Learning Disabilities
 – Residential care
 – Independent supported living
 – Community support services
Mental Health
 – Residential care
 – Independent supported living
 – Community outreach
Children Services
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
 – Apprenticeship
10 CareTech Holdings PLC Annual Report and Accounts 2014
Strategic Report
Creating sustainable  
value in our markets People
1.4m
(85,000 cannot live independently)
Market for residential learning 
disabilities and supported living worth
£5.9bn
Market growth rate
5.5% pa
People
2.4%
(of the UK population will be referred  
to a specialist psychiatric service)
NHS/LA total spend on 
mental health is
£14.4bn
Market growth rate
5.5% pa
People
51,340
Placed in foster care in England
People
17,500
Children in England looked after 
outside foster care 
People
510,000
Apprenticeship starts
Foster care market across 
England worth
£1.1bn
Residential children’s market 
across England worth
£1.0bn
Apprenticeship budget
£1.6bn
Market growth rate
1.5% pa
Market growth rate
0.2% pa
Market growth rate
9.1% pa
11 CareTech Holdings PLC Annual Report and Accounts 2014
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’s business model is to operate throughout mainland Britain in England, Wales and 
Scotland to provide care to people of any age who are local authority or NHS funded where  
we are capable of offering an appropriate Care Service.
Our Business Model
During the period, the Group continued 
to develop and grow its four existing 
operating divisions, which come under 
the two outcome-based sectors of Adult 
services and Young People services.  
We have also acquired a new Learning 
services division. 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.
Setting the standard  
in quality of service
Adult Learning Disabilities
Residential care 
Independent supported living 
Community support 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
Learning Services
Pre-employment, development  
and apprenticeship programmes
12 CareTech Holdings PLC Annual Report and Accounts 2014
Strategic Report
continued
A strategy to drive  
future growth Setting out our key strategic priorities
We shall continue to improve the quality and scope of our 
services, increase market share and grow shareholder value.
Our Strategy
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. However, we  
can always do more and the coming year 
will see a further significant expansion  
of our endeavours. This is driven by 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 and psychologists.
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 second to none. 
This is reinforced by our presence at major 
industry events where we have been reliable 
sponsors and commentators. However,  
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. 
CareTech’s own research indicates stronger 
growth in the more complex end of social 
care, favouring the larger and best resourced 
provider organisations.
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.
13 CareTech Holdings PLC Annual Report and Accounts 2014
Strategic Review Governance Financial Statements 2,000
2,050
2,100
2,150
2014 2013 2012 2011
0
25
50
75
100
2014 2013 2012 2011
0
25
50
75
100
2014 2013 2012 2011
0
10
20
30
40
2014 2013 2012 2011
Our KPIs help us to measure the Group’s performance against its strategy and objectives.
Capacity
2,074 places
(2013: 2,116 places)
Mature estate occupancy
92%
(2013: 92%)
Blended occupancy
86%
(2013: 84%)
Underlying EBITDA
£30.7 m
(2013: £26.4m)
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 use  
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 reduced by 42 reflecting the net of  
63 additional beds now available, 12 beds withdrawn for 
reconfiguration, 30 places less in small supported living 
packages and a reduction of 63 for carers not currently 
accepting children.
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 remained 92% for a number of years  
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 %  
of the Group’s total capacity and so reflects facilities 
undergoing development and reconfiguration.
Performance this year
The ratio has improved by 2% to 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.
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 (4) to the  
Financial Statements.
Performance this year
The underlying EBITDA has improved by £4.3m or  
16.3% year on year. This reflects rent savings due to  
the business combination acquired in 2013 reduced  
by the reconfiguration work on those properties,  
and improved margin.
14 CareTech Holdings PLC Annual Report and Accounts 2014
Highly visible long-term  
income stream
Strategic Report
continued 0
5
10
15
20
2014 2013 2012 2011
0
10
20
30
40
2014 2013 2012 2011
0
50
100
150
200
2014 2013 2012 2011
Underlying profit after tax
£16.1m
(2013: £14.1m)
Underlying diluted EPS
31.01p
(2013: 27.43p)
Net debt
£166.1m
(2013: £168.5m)
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 (4) to the Financial Statements.
Performance this year
The underlying profit after tax has improved by £2.1m or 
14.8% year on year. This reflects the rent savings offset by 
additional interest and improved margin, net of tax.
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 shares which are fully described in notes (9)  
and (10) to the Financial Statements.
Performance this year
The underlying diluted earnings per share has increased  
by 3.58p at 13.1% year on year. This is the increase in 
underlying profit after tax partly offset by the increase  
in the number of shares to give a strong growth in  
earnings per share.
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 42.
Performance this year
Net debt reduced by £2.33m or 1.4% between  
30 September 2013 and 30 September 2014. Cash 
increased by £0.1m and bank loans reduced by £2.2m  
offset by an increase in leases and hire purchase  
contracts on new vehicles and IT equipment of £1.8m.
15 CareTech Holdings PLC Annual Report and Accounts 2014
Strategic Review Governance Financial Statements 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 
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.
In October a Whistleblower put falsified 
material relating to a Mental Health facility on 
the Internet which was replicated by the local 
press and online media. This reputational 
damage was resolved and later withdrawn 
from the Internet.
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 to 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.
Reputation
The Group has to have a reputation for 
delivering service that is good value and  
takes account of all risk. 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.
16 CareTech Holdings PLC Annual Report and Accounts 2014
Managing our risks  
and resources
Strategic Report
continued Adult Services Children Services
Adult Services
Residential Care 
and Community 
Support
Mental Health 
and Specialist 
Services
Young 
People
Residential 
Services and
Education
Foster Care Learning 
Services
Our resources
The key resources that we require to  
provide care are:
People to provide care
We need staff and carers who have 
appropriate skills and qualities to look 
after children or adults in need of care.
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
We need financial stability to be able to 
employ the right staff and to provide the  
right land and buildings.
By order of the Board
Farouq Sheikh
Chairman
14 January 2015
Corporate Direction and Support
Incorporates the Shared Services Centre, Human Resources, National Training Centre, 
Quality, Regulation and Compliance, Treasury and IT.
Coppice Lodge, Dudley. 
17 CareTech Holdings PLC Annual Report and Accounts 2014
Strategic Review Governance Financial Statements
Business segments Overview
It gives me great pleasure to report on 
another 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 and has 
made further encouraging progress during 
the year.
Results
Revenue of £123.3m (2013: £114.3m) for the 
year to 30 September 2014 represented growth 
of 7.9% and generated underlying EBITDA 
growth of 16.3% to £30.7m (2013: £26.4m).
Underlying operating profit increased by 17.6% to 
£27.3m (2013: £23.2m) and total operating profit 
decreased by 38% to £20.5m (2013: £32.9m)  
due to a non-recurring significant increase in 
2013 as a result of the business combination.
Underlying profit before tax for the period was 
13% higher at £19.7m (2013: £17.5m) and profit 
before tax was £12.5m (2013: £28.1m).
Consolidation and creating  
new opportunities
CareTech remains at the forefront of social 
care outsourcing and in the past year there 
has been an increase in working closely with 
commissioners and regulators as the whole 
system grapples with the changes that policy 
and financial pressure have brought.
National public policy is 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 toward 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.
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 fit 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.
Haroon Sheikh 
Chief Executive Officer
18 CareTech Holdings PLC Annual Report and Accounts 2014
A strong foundation  
for growth
Chief Executive’s Statement 
and Performance Review 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.
There have been a small number of property 
disposals during the year where the service 
was not meeting commissioner aspirations 
and a reconfiguration was not possible or 
economically viable.
The Group has developed the site in Dudley 
for the Children Services and the first service 
has recently opened. The second service is 
being developed on the same site and 
planning permission has been granted for the 
conversion of an existing building into a seven 
bedroom service for children with learning 
disabilities and a six bedroom children’s 
wheelchair accessible bungalow.
Our Children Services have had significant 
growth in Scotland and there have been new 
services opened in Dumfries, Galloway and Fife. 
In addition a new education facility is being 
opened near Dumfries to support these children. 
In North Wales the Group has developed  
an Adult Learning Disability Service which  
is completed and awaiting registration.
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 will continue through the next 
financial year. We are seeing the benefits of 
new executive appointments and the Clinical 
Director role is having 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.
During the year we introduced a new care 
system for Foster Care which has recently  
gone live and we also have a new Time and 
Attendance system which is being implemented 
across all of the residential services in the 
coming months which will further our policy  
of back office centralisation.
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 commissioners’ 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 new Learning 
Services division, 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, with massive growth potential,  
but has also won a prestigious tender with  
the Department of Work and Pensions to 
develop a new model of mental health 
rehabilitation using the skills derived  
from working with apprentices.
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. 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.
Opening of Coppice Lodge,  
Dudley by Ben Mould  
ably assisted by Haroon Sheikh (CEO),  
Dr Linda Cropper (Commissioning 
Engagement Manager, Dudley CCG)  
and Councillor Bryan Cotterill.
19 CareTech Holdings PLC Annual Report and Accounts 2014
Strategic Review Governance Financial Statements Our strategy is to offer a bespoke range  
of options so that we can maintain the  
Care Pathways that distinguish us from  
other providers.
Overview of progress
Our focus during the past year has continued 
to be on building on the acquisitions which 
established the Care Pathways whilst 
introducing innovative new solutions to meet 
the challenges faced by care commissioners. 
Capacity has reduced to 2,074 places 
principally because we have continued to 
reconfigure services. Occupancy levels within 
our mature services remain at a creditable 92%, 
or 86% when taking into account our services 
under development and transition which is a 
2% improvement on the previous year.
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 segments of Adult  
Services and Children Services comprise  
the following five care pathways.
1. Adult Learning Disabilities
Revenue £74.2m (2013: £73.9m)
EBITDA £22.6m (2013: £18.5m)
Capacity 1,450 (2013: 1,423)
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.
This includes adult residential care homes, 
independent supported living and community 
support services.
The principal reason for the increase in 
EBITDA of £4.1m was the rent saving arising 
from the business combination in 2013, the 
reconfiguration of homes and their reopening 
late in the year.
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 is being maintained  
and increased in some local authorities.
During the past year we have developed  
63 beds through reconfiguration of existing 
residential services. Further new provision  
is under development.
2. Mental Health
Revenue £7.3m (2013: £6.5m)
EBITDA £2.5m (2013: £2.2m)
Capacity 151 (2013: 161)
Mental Health works in partnership 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.
“ 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
20 CareTech Holdings PLC Annual Report and Accounts 2014
Chief Executive’s Statement 
and Performance Review
continued These services also had a reconfiguration  
of homes and a reopening early in the year.
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 but so  
is the immediate response by Government  
to one of the scandals of our age. There  
has been no 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. It was very 
pleasing that our management team in 
Lyndhurst, a residential home, were awarded 
the Care Team of the Year award against stiff 
competition at the prestigious National Care 
Awards ceremony this year.
3. Foster Care
Revenue £12.0m (2013: £14.3m)
EBITDA £3.0m (2013: £4.3m)
Capacity 320 (2013: 383)
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.
This trend is driven by cost considerations, 
where fostering is considerably less expensive 
than residential care and by perceived quality 
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.
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 suggest 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.
4. Young People Residential Services
Revenue £21.9m (2013: £19.6m)
EBITDA £7.4m (2013: £6.2m)
Capacity 153 (2013: 149)
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 new 
services and will benefit from the Dudley site 
in the next financial year.
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. I would like to express 
particular praise for the team in Scotland  
who have established a good presence  
in a relatively short time.
5. Learning Services
Revenue £7.9m
EBITDA £0.1m
In November 2013, CareTech acquired a 
Learning Services business now operating as 
EQL Solutions, a national provider specialising  
in employment and training services to young 
people and adults. The business was acquired 
out of the administration of Elmfield Training 
with the knowledge that it required turnaround, 
which has been the management focus  
during the year. The necessary investment  
and re-structuring will be completed shortly.
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 is also developing programmes for 
service users by enhancing the pathways to 
independent living and employment. Young 
People leaving care, for example, often don’t 
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.
EQL training staff at a BHS store.
21 CareTech Holdings PLC Annual Report and Accounts 2014
Strategic Review Governance Financial Statements Early mapping with CareTech’s core business 
around the year end 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.
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 industry.
Our task during this year has been to  
integrate the new company, EQL Solutions 
and to establish a sound business base for 
growth and develop new products in line  
with discussions held with the Skills Funding 
Agency. I am pleased to confirm that we  
have made progress with EQL Solutions and 
the team are strongly motivated to develop  
their initiatives in the world of social care 
through Aspire. 
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 a significant number waiting to  
join the programme over the next 12 months. 
From November 2014, all newly hired support 
workers will also be offered an Apprenticeship 
as part of their induction to CareTech. The 
Aspire programme aims to empower every 
colleague to display the behaviours needed to 
deliver the high quality, personalised care and 
to ensure there is a Development Pathway 
available to all. 
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.
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 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.
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  
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.
Out of a total of 3,531 staff 70% 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.
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 
continues to offer new invitations regularly 
and is 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.
22 CareTech Holdings PLC Annual Report and Accounts 2014
Chief Executive’s Statement 
and Performance Review
continued 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. It is of 
course an election year and the major parties 
have already begun to pinpoint both health 
and social care for investment.
There is 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 Company, delivering a 
quality of care that makes such a difference  
to so many lives.
Haroon Sheikh
Chief Executive Officer
14 January 2015
Lyndhurst Staff Team –  
National Team of the  
Year 2014 Award
The staff of Lyndhurst  
collecting their award at the  
Greater London Care Awards.
23 CareTech Holdings PLC Annual Report and Accounts 2014
Strategic Review Governance Financial Statements Results
The underlying operating profit remains 
strong at £27.3m compared to £23.2m 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 
developments and cost efficiencies as well as 
the transaction on 4 November 2013 in respect 
of EQL Solutions for a total cash consideration 
of £1.1m to enable the Group to provide 
apprenticeship and pre-employment training.
Underlying diluted earnings per share 
increased by 13.1% to 31.01p (2013: 27.43p) 
per share and underlying profit after tax has 
risen by 14.2% to £16.1m (2013: £14.1m). 
Basic and diluted earnings per share decreased 
by 50% to 23.86p and 23.85p respectively 
(2013: 47.54p basic and diluted) and profit 
after tax decreased by £12.0m to £12.4m 
(2013: £24.4m).
Cash inflows from operating activities before 
tax and non-underlying items paid were 
£30.3m (2013: £23.9m), an increase of 27%. 
Net debt at the year end of £166.1m has 
reduced by £2.3m for the year.
Income Statement
The Consolidated Income Statement  
before non-underlying items for the year  
is summarised in Table 1 below.
Revenue
Revenue of £123.3m (2013: £114.3m) was  
7.9% higher than in 2013. 
In the established Adult Learning Disabilities 
segment we continued to experience high 
levels of occupancy and reported 92% 
occupancy at 30 September 2014. 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 2014 
was 86% of capacity (September 2013: 84%).  
As in recent years the demand for residential 
services continues to be encouraging for  
high acuity users.
As set out in the Chief Executive’s Statement 
and note 3 to the Accounts we are again 
reporting segmental information for the 
financial year and last year which includes 
information on client capacity and turnover 
for each segment with the addition of 
Learning Services in this year.
Michael Hill 
Group Finance Director
Table 1 – Consolidated Income Statement before non-underlying items
The Consolidated Income Statement, before non-underlying items, for the year is  
summarised below:
2014
£m
2013
£m Growth
Revenue 123.3 114.3 7.9%
Gross profit 46.6 45.6
Administrative expenses (15.9) (19.2)
Underlying EBITDA 30.7 26.4 16.3%
Underlying EBITDA margin 24.9% 23.1%
Depreciation (3.4) (3.1)
Share-based payments charge (0.1) (0.1)
Underlying operating profit 27.3 23.2 17.6%
Net financial expenses (7.5) (5.7)
Underlying profit before tax 19.7 17.5
Taxation (3.6) (3.4)
Effective tax rate 18.2% 20.0%
Underlying profit for the year 16.1 14.1
Weighted average number of diluted shares (millions) 52.0 51.3
Underlying diluted earnings per share 31.01 27.43p
Full year dividend per share 8.00p 7.00p
24 CareTech Holdings PLC Annual Report and Accounts 2014
Financial Review
The Group has repeated 
the good progress of  
recent years in 2014 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 
64.7% in 2013 to 60.2% in 2014 and EBITDA 
before Group costs from 59.3% in 2013 to 
63.5% in 2014 as Learning Services joined  
the Group.
The Young People Services total revenue  
has risen by 11.7% with Mental Health rising  
by 12.3% and Foster Care falling by 16.1%. 
Their proportion of the EBITDA before  
Group costs has risen from 40.7% in 2013  
to 36.2% in 2014 due mainly to the higher 
margin generated by the Adult Learning 
Disabilities Services following the rent  
savings due to the Business Combination  
in 2013 and also the improved  
margin achieved.
Underlying EBITDA and total EBITDA
Underlying EBITDA has grown by 16.3% from 
£26.4m in 2013 to £30.7m in 2014. Underlying 
EBITDA margin has increased from 23.1% to 
24.9% mainly due to the segment mix as the 
three smaller segments all grew and with a 
higher rate of margin.
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 
£15.9m (2013: £19.2m) and decreased by £3.3m 
during the year. In 2013 they represented 16.8% 
of Group revenue and in 2014 this further 
improved to 12.9% of Group revenue.
There has been a considerable effort in the 
year to reduce administrative expenses with 
the key element being property rental costs.
The extent to which rent savings have  
been reflected in the Group’s profitability  
is reduced by the degree of reconfiguration 
work that the Group elects to carry out  
at the properties. The reconfiguration of 
services is a central part of the Board’s 
strategy. It enhances average fee rates and 
maintains the Group’s reputation as a provider 
of highest quality of care and the business 
combination in 2013 provided an opportunity 
which allowed reconfiguration of services.
Table 2 – Revenue
2014
Revenue
£m
2014
Underlying
EBITDA
£m
2013
Revenue
£m
2013
Underlying
EBITDA
£m
Adult Learning Difficulties 74.2 22.6 73.9 18.5
Mental Health 7.3 2.5 6.5 2.2
Young People Residential Services 21.9 7.4 19.6 6.2
Foster Care 12.0 3.0 14.3 4.3
Learning Services 7.9 0.1 – –
123.3 35.6 114.3 31.2
Less unallocated Group costs – (4.9) – (4.8)
123.3 30.7 114.3 26.4
25 CareTech Holdings PLC Annual Report and Accounts 2014
Strategic Review Governance Financial Statements Cash flow and net debt
The cash flow statement and movement in 
net debt for the year is summarised below:
2014
£m
2013
£m
Underlying EBITDA 30.7 26.4
(Increase) in  
working capital (0.2) (2.5)
Cash inflows from 
operating activities 30.5 23.9
Tax paid (0.3) (1.9)
Interest paid (7.1) (5.5)
Dividends paid (2.4) (3.3)
Acquisitions and 
capital expenditure (10.3) (44.0)
Cash flow before 
adjustments 10.4 (30.8)
Non-underlying  
cash flows including 
derivative financial 
instruments (8.0) (6.5)
Movement in net debt 2.4 (37.3)
Opening net debt (168.5) (131.2)
Closing net debt (166.1) (168.5)
Net debt at 30 September 2014 of £166.1m 
(2013: £168.5m) has decreased by £2.4m 
during the financial year, with an investment 
of £10.3m in acquisitions and capital 
improvements during the year.
Non-underlying items had a cash outflow 
effect of £4.2m (2013: £2.3m) being payment  
of acquisition and integration costs and 
payments made under onerous contracts.
The number of employees in management 
and administration has increased by seven.  
A new care system for Foster Care has been 
introduced across the Group and this has 
recently gone live whilst the new Time and 
Attendance system is being implemented 
across all of the residential services in the 
coming months which will further our  
back office centralisation.
Total EBITDA decreased by 29% from  
£39.9m in 2013 to £28.3 in 2014 as a  
result of a non-recurring gain in 2013.
Operating profit and profit  
before tax
The depreciation charge is £3.4m  
(2013: £3.2m) 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 18% to £27.2m (2013: £23.2m).
Total operating profit decreased by 38% 
to £20.5m (2013: £32.9m).
Net underlying financial expenses of  
£7.5m (2013: £5.7m) increased over the 
previous year due to the continued use  
of the secured bank loans which had  
reduced following loan repayments,  
although there were additional finance  
leases taken out on new home vehicles 
during the year.
Underlying profit before tax was £19.7m 
(2013: £17.5m) which is an increase of 13%.
Total profit before tax decreased by 56%  
to £12.5m (2013: £28.1m).
Taxation and diluted earnings  
per share
The effective underlying tax rate was 18.2% 
(2013: 20.0%) 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 1.5% whilst the underlying diluted 
earnings per share rose to 31.01p in 2014  
from 27.43p in 2013.
Basic and diluted earnings per share 
decreased by 50% to 23.86p and 23.85p 
respectively (2013: 47.54p basic and 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 5.40p per share (2013: 4.68p), 
bringing the total dividend for the year  
to 8.00p (2013: 7.00p), a growth of 14.3%. 
Dividend cover for 2014, based upon diluted 
earnings per share before non-underlying 
items is 3.87 times (2013: 3.92 times).
Non-underlying items
As more fully explained on the face of the 
Consolidated Statement of Comprehensive 
Income and in note 4 to the Accounts, the 
Directors have separately disclosed a number 
of non-underlying items in order to improve 
understanding of the trading performance 
achieved by the Group. Total non-underlying 
items represent a charge of £3.7m (2013: 
credit of £10.3m) and the principal items are 
the amortisation of intangible assets and 
integration and reorganisation costs.
In the prior year, the credit was a result of  
the business combination.
26 CareTech Holdings PLC Annual Report and Accounts 2014
Financial Review
continued Underlying cash inflows from  
operating activities
The £30.3m (2013: £23.9m) cash inflow from 
operating activities, before non-underlying 
items, represents a 98% (2013: 90%) 
underlying EBITDA cash conversion ratio.
Interest and dividend cash flows
Interest paid of £7.1m (2013: £5.5m) 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.
Acquisitions and capital expenditure
During the year we invested total funds of 
£10.3m (2013: £44.0m). On 4 November 2013 
the Group acquired the majority of the 
business and assets of Elmfield Training 
Limited, a provider of apprenticeship and 
vocational training funded either directly  
by the Skills Funding Agency or indirectly 
through clients’ own Skills Funding  
Agency contracts.
The acquisition had been completed for  
a total cash consideration of £1.1m. The 
acquisition and the ongoing working capital 
costs of the business have been funded from 
the Group’s current bank facilities.
The acquisition will enable the Group to 
provide apprenticeship and pre-employment 
training in the Care sector. The acquired 
business has been rebranded EQL Solutions 
Limited. The necessary investment and 
restructuring will be completed shortly. 
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 £10.1m includes  
£7.0m to update our portfolio of assets.
Banking and arrangements
The Group is pleased to have continued  
its strong relationships with Royal Bank of 
Scotland, Lloyds TSB, Santander and Allied 
Irish following the refinancing in July 2012. 
That facility was for a total of £149.4m 
comprising a term loan, a revolving credit 
facility and an overdraft facility. The term  
was 4½ years, expiring in January 2017  
and the Group had taken five new hedging 
instruments to reduce its interest rate risk.
Additional banking facilities were provided in 
August 2013 on the same competitive terms 
as the banking facility announced in 2012, 
with debt service cost after hedging at less 
than 4.5%, to fund the business combination. 
The facility has certain covenants attached to 
it which are mostly EBITDA related and were 
set with sufficient facility headroom. 
As part of the additional financing the Group’s 
new freehold property portfolio was valued 
independently at £50m. The remainder of  
the Group’s freehold properties were valued 
at £225m in July 2012 giving a total of  
£275m (as shown in note 11).
At 30 September 2014 the Group has available 
bank facilities totalling £171.2m which are 
sufficient, with cash flow from operating 
activities, to fund present commitments.
Going concern
This Financial Review has covered the  
cash flows, liquidity position and borrowing 
facilities of the Group and in the Accounts 
there is additional information on 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. The Group meets its day-to-day 
working capital requirements through a 
mixture of bank facilities which are sufficient, 
with cash flow from profits, 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
14 January 2015
27 CareTech Holdings PLC Annual Report and Accounts 2014
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 Sheikh 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 31.01p  
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 56)
Haroon Sheikh BSc 
Chief Executive Officer (aged 58)
Michael Hill 
Group Finance Director (aged 63)
28 CareTech Holdings PLC Annual Report and Accounts 2014
Board of Directors
Strong 
leadership 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 recently 
been bestowed 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 52)
Dr Mike Adams OBE 
Non-Executive Director (aged 43)
Jamie Cumming
Non-Executive Director (aged 64)
29 CareTech Holdings PLC Annual Report and Accounts 2014
Strategic Review Governance Financial Statements
An experienced, driven and focused corporate board. 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.
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 2014:
Board
Audit 
Committee
Remuneration 
Committee
Care 
Governance 
and 
Safeguarding 
Committee
Farouq Sheikh 9 – – –
Haroon Sheikh 10 – – 1*
Michael Hill 11 2* 4 4
Stewart Wallace 11 – – 4
Karl Monaghan 11 2 4 4
Mike Adams 11 2 4 4
Jamie Cumming 11 2 4 4
* by invitation.
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.
As a Company quoted on AIM, a market operated by the London  
Stock Exchange, the Company is not required to comply with the  
UK Corporate Governance Code (the “Code”).
However, the Board is accountable to the Company’s Shareholders  
for ensuring effective governance and therefore strives to apply best 
practice and materially to comply with the UK Corporate Governance 
Code to the extent that the Board considers it is appropriate for a  
public company of its size and complexity.
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 28 and 29 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.
As noted above a Company quoted on AIM, a market operated by 
the London Stock Exchange, the Company is not required to comply 
with the UK Corporate Governance Code.
30 CareTech Holdings PLC Annual Report and Accounts 2014
Corporate Governance Report  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, Michael Hill and Jamie Cumming.
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. It has recently 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. To further strengthen the Committee and  
to work with clinical staff across the Group to help deliver outstanding 
care and support Dr. Junaid Bajwa has recently joined as Clinical 
Director. He is a General Practitioner with extensive experience of 
Clinical Commissioning and developing clinical and professional 
strategies in a CCG. 
We have held several useful meetings with regulators and also  
invited key regulation managers to attend our Safeguarding and Care 
Governance 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 128 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 Group has achieved 89% service compliance against a national 
average of 85%. Adult services in Wales are regulated under different 
national legislation and are not currently rated on any form of scale.
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 5 to the financial statements.
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 35 and 36. Also detailed in that 
report are Directors’ remuneration, shareholdings and share option 
scheme information. The Terms of Reference were independently 
reviewed and updated during last year.
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.
31 CareTech Holdings PLC Annual Report and Accounts 2014
Strategic Review Governance Financial Statements 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 16. 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.
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
14 January 2015
Metropolitan House 
3 Darkes Lane
Potters Bar
Hertfordshire
EN6 1AG
Our Children division is regulated by the Office for Standards  
in Education (Ofsted) in England and these services are rated as 
Outstanding or Good as at the year end. In October part of the 
Greenfields Service was rated Adequate and we are working to 
demonstrate to the Regulator that the issues have been fully 
addressed. 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 deal with Adults and Children have rated our services highly. 
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.
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.
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.
32 CareTech Holdings PLC Annual Report and Accounts 2014
Corporate Governance Report 
continued 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 4 March 2014 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 10 December 2014, 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 36.
No. of 
ordinary 
shares of 0.5p Percentage
Henderson Global Investors 9,186,193 17.66%
Richard Griffiths 2,905,000 5.58%
Norges Bank 2,027,151 3.89%
Octopus Investment Nominees 3,641,800 7.00%
Hof Hoorneman Bankiers 2,488,000 4.78%
Hendrik M Van Hejiest 2,020,000 3.88%
Hargreave Hale 1,627,930 3.13%
The Directors present their report and the audited Group financial 
statements for the year ended 30 September 2014.
Business review and future developments
The Consolidated Statement of Comprehensive Income detailed  
on page 39 sets out the Group’s financial results for the year.
The Company is required by the Companies Act 2006 to include a 
Strategic Report. The information that fulfils the requirements of the 
Strategic Report can be found in the Chairman’s Statement on pages  
8 and 9, the Strategic Report on pages 10 to 17, the Chief Executive’s 
Statement and Operating Review on pages 18 to 23, and the Financial 
Review on pages 24 to 27, which are incorporated in this report by 
reference. These reports also include details of the performance  
of the Group during the year ended 30 September 2014 and its 
prospects for the future.
Key performance indicators are set out in the “Highlights” on pages 14 
and 15. The key risks and uncertainties facing the Group are set out in 
this report below and in the Strategic Report on page 16.
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 page 16.
Dividends
Dividends of £2,430,000 have been paid during the year. The 
Directors propose a final dividend of 5.40p per share (2013: 4.68p) 
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 20 to the financial statements.
Financial instruments
The Group is exposed to a combination of price, credit, interest rate 
and cash flow 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 23 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.
The Group operates a sharesave share option scheme for eligible 
employees, details of which can be found in note 19. The Board  
feels that share ownership among employees fosters team spirit and 
motivation and will contribute to the ultimate success of the Group.
33 CareTech Holdings PLC Annual Report and Accounts 2014
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
14 January 2015
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 28 and 29.
In accordance with the articles of association, Michael Hill and  
Karl Monaghan 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 
Stewart Wallace (retired 27 September 2014)
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 35.
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 
cash flow 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.
34 CareTech Holdings PLC Annual Report and Accounts 2014
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.
During the last year the Remuneration Committee took external 
advice to update its Terms of Reference to reflect current best  
practice and changes in legislation and regulation.
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.
35 CareTech Holdings PLC Annual Report and Accounts 2014
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
2014  
£000
2013  
£000
2014  
£000
2013  
£000
2014  
£000
2013  
£000
2014  
£000
2013  
£000
2014  
£000
2013  
£000
Current Directors
Farouq Sheikh 264 278 16 47 36 – 316 325 8 81
Haroon Sheikh 209 135 43 33 36 – 288 168 10 79
Karl Monaghan 43 43 – – – – 43 43 – –
Mike Adams 28 28 – – – – 28 28 – –
Michael Hill 150 150 3 8 86 – 239 158 – –
Jamie Cumming 28 14 – – – – 28 14 – –
Stewart Wallace
(1)
150 143 21 26 36 – 207 169 8 7
Total 872 791 83 114 194 – 1,149 905 26 167
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 2014
Number of ordinary
0.5p shares
30 September 2013
Number of ordinary
0.5p shares
Westminster Holdings Limited
(1)
10,787,328 10,787,328
Cosaraf Trust
(2)
2,060,091 2,060,000
Cosaraf Pension Fund
(3)
170,000 170,000
Farouq Sheikh 485,000 485,000
Haroon Sheikh 485,000 485,000
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 Directors’ holdings under the Group’s Executive Shared 
Ownership Plan during the year ended 30 September 2014. None of the Directors have any share options in the Company. 
By order of the Board
Jamie Cumming
Chairman of the Remuneration Committee 
14 January 2015 
Metropolitan House  
3 Darkes Lane  
Potters Bar  
Hertfordshire  
EN6 1AG
36 CareTech Holdings PLC Annual Report and Accounts 2014
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. 
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;
 – 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.
37 CareTech Holdings PLC Annual Report and Accounts 2014
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
Central Milton Keynes
14 January 2015
We have audited the financial statements of CareTech Holdings PLC 
for the year ended 30 September 2014 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 37, 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 
2014 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; 
 – 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; and
 – the financial statements have been prepared in accordance  
with the requirements of the Companies Act 2006.
38 CareTech Holdings PLC Annual Report and Accounts 2014
Independent Auditor’s Report
to the members of CareTech Holdings PLC Note
2014 2013
Underlying
£000
Non-
underlying
(i)
£000
Total
£000
Underlying
£000
Non-
underlying
(i)
£000
Total
£000
Revenue 3 123,302 – 123,302 114,323 – 114,323
Cost of sales (76,708) – (76,708) (68,749) – (68,749)
Gross profit 46,594 – 46,594 45,574 – 45,574
Administrative expenses (19,341) (6,799) (26,140) (22,405) 9,733 (12,672)
Operating profit 27,253 (6,799) 20,454 23,169 9,733 32,902
EBITDA
(ii)
30,653 (2,377) 28,276 26,402 13,454 39,856
Depreciation 11 (3,350) – (3,350) (3,174) – (3,174)
Amortisation of intangible assets 12 – (4,422) (4,422) – (3,721) (3,721)
Share-based payments charge (50) – (50) (59) – (59)
Operating profit 27,253 (6,799) 20,454 23,169 9,733 32,902
Financial expenses 4,7 (7,540) (423) (7,963) (5,719) 905 (4,814)
Profit before tax 19,713 (7,222) 12,491 17,450 10,638 28,088
Taxation 4,8 (3,577) 3,496 (81) (3,392) (329) (3,721)
Profit and comprehensive income for the year 
attributable to equity shareholders of the parent 16,136 (3,726) 12,410 14,058 10,309 24,367
(i)  Non-underlying items comprise: amortisation of intangibles, acquisition expenses, bargain purchase credits, fair value adjustments on prior year acquisitions, 
gains or losses on disposal of plant and equipment, changes in value and additional finance payments in respect of derivative financial instruments, 
integration, reorganisation and redundancy costs, minimum future lease uplifts and provision for onerous leases. See note 4.
(ii) EBITDA is operating profit stated before depreciation, amortisation of intangible assets, and share-based payments charge.
Strategic Review
39 CareTech Holdings PLC Annual Report and Accounts 2014
Governance Financial Statements
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2014 Note
2014
£000
2013
£000
Non-current assets
Property, plant and equipment 11 243,309 238,568
Other intangible assets 12 30,826 30,980
Goodwill 12 36,037 31,120
310,172 300,668
Current assets
Inventories 515 515
Trade and other receivables 14 8,675 8,054
Derivative financial instruments 156 –
Cash and cash equivalents 15 3,900 3,783
13,246 12,352
Total assets 323,418 313,020
Current liabilities
Loans and borrowings 16 9,222 7,595
Trade and other payables 17 14,642 11,833
Deferred and contingent consideration payable – 52
Deferred income 1,563 1,413
Corporation tax 6,999 6,035
Derivative financial instruments – 101
32,426 27,029
Non-current liabilities
Loans and borrowings 16 160,811 164,651
Deferred tax liabilities 18 20,602 22,367
Derivative financial instruments – 231
Onerous lease provision 24 420 –
181,833 187,249
Total liabilities 214,259 214,278
Net assets 109,159 98,742
Equity 
Share capital 20 260 260
Share premium 20 57,221 57,202
Shares held by Executive Shared Ownership Plan 20 (1,890) (2,258)
Merger reserve 20 8,498 8,498
Retained earnings 20 45,070 35,040
Total equity attributable to equity shareholders of the parent 109,159 98,742
These financial statements were approved by the Board of Directors on 14 January 2015 and were signed on its behalf by:
  
Farouq Sheikh  Michael Hill
Chairman  Group Finance Director
Company number: 04457287
40 CareTech Holdings PLC Annual Report and Accounts 2014
Consolidated Balance Sheet
at 30 September 2014 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 2012 256 55,715 (2,258) 8,498 13,928 76,139
Profit for the year – – – – 24,367 24,367
Total comprehensive income – – – – 24,367 24,367
      
Issue of ordinary shares 4 1,487 – – – 1,491
Equity settled share-based payments charge – – – – 59 59
Dividends – – – – (3,314) (3,314)
Transactions with owners recorded directly in equity 4 1,487 – – (3,255) (1,764)
At 30 September 2013 260 57,202 (2,258) 8,498 35,040 98,742
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
Strategic Review
41 CareTech Holdings PLC Annual Report and Accounts 2014
Governance Financial Statements
Consolidated Statement of Changes in Equity
as at 30 September 2014 Note
2014
£000
2013
£000
Cash flows from operating activities
Profit before tax 12,491 28,088
Adjustments for:
Financial expenses 7,963 4,814
Adjustments for minimum future lease payment uplifts – 1,155
Onerous lease provision charge 24 – 73
Depreciation 11 3,350 3,174
Amortisation 12 4,422 3,721
Share-based payments charge 50 59
Acquisition transaction cost 250 2,409
Post acquisition integration and re-organisation cost 2,127 1,441
Profit on disposal of property, plant and equipment (85) (50)
Gain recognised in respect of business combinations 22 – (18,532)
Operating cash flows before movement in working capital 30,568 26,352
(Increase)/Decrease in trade and other receivables (777) 1,328
Increase/(Decrease) in trade and other payables 552 (3,886)
Decrease in inventories – 100
Operating cash flows before adjustment items 30,343 23,894
Exceptional costs paid 4(i) (1,633) (2,263)
Payments made under onerous contracts (2,577) –
Cash inflows from operating activities 26,133 21,631
Tax paid (312) (1,926)
Net cash from operating activities 25,821 19,705
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 1,887 3,742
Payments for business combinations net of cash acquired 22(a) (1,094) (38,714)
Acquisition of property, plant and equipment (6,976) (5,525)
Acquisition of intangible items 12 (3,294) (1,366)
Payment of acquisition costs (862) (2,130)
Net cash used in investing activities (10,339) (43,993)
Cash flows from financing activities
Proceeds from the issue of share capital (net of costs) 20 15 30
Proceeds from new loan (net of costs) 2,938 39,528
Interest paid (7,105) (5,535)
Swap break fees – (2,383)
Cash outflow arising from derivative financial instruments (911) (763)
Repayment of borrowings (6,950) (5,250)
Payment of finance lease liabilities (922) (817)
Dividends paid 21 (2,430) (3,314)
Net cash (used in)/generated from financial activities (15,365) 21,496
Net increase/(decrease) in cash and cash equivalents 117 (2,792)
Cash and cash equivalents at start of year 3,783 6,575
Cash and cash equivalents at 30 September 15 3,900 3,783
Net debt in the balance sheet comprises:
Note
2014  
£000
2013  
£000
Cash and cash equivalents 15 3,900 3,783
Bank loans 16 (166,198) (170,174)
Finance lease and hire purchase contracts 16 (3,835) (2,072)
Net debt at 30 September (166,133) (168,463)
42 CareTech Holdings PLC Annual Report and Accounts 2014
Consolidated Cash Flow Statement
for the year ended 30 September 2014 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 2014 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 14 January 2015.
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 18 to 23 and pages 10 to 17. The financial position 
of the Group, its cash flows, liquidity position and borrowing facilities are described in the Financial Review on pages 24 to 27. In addition, note 
23 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 cash flow 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 cash flow 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.
A new facility was agreed with the Group‘s Bankers in August 2014 on the purchase of a business combination. The new debt facilities have 
been provided by the Group’s syndicate of four lenders, Royal Bank of Scotland, Lloyds TSB, Alliance & Leicester, Allied Irish Bank and have 
been provided on the same competitive terms as the facility announced in June 2013.
The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the next 
12 months. The Group has prepared detail budgets and cash flow 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 IFRS 13 ‘Fair Value Measurement’ was adopted which applies prospectively and the disclosure requirements need not be 
applied to the comparative information in the first year of application. The Group has, however, included as comparative information the  
IFRS 13 disclosures that were required previously by IFRS 7 ‘Financial Instruments: Disclosures’. The Group has applied IFRS 13 for the first  
time in the current year, see note 23. 
Requirements Pronouncement Year beginning 1 January 2014 Effective date
IFRS IFRS 10 Consolidated Financial Statements IASB effective date financial year commencing on/after 
1 January 2013 – EU-adopted IFRS effective date 
financial year commencing on/after 1 January 2014
IFRS IAS 27 (Revised) Separate Financial Statements IASB effective date financial year commencing on/after 
1 January 2013 – EU-adopted IFRS effective date 
financial year commencing on/after 1 January 2014
IFRS Amendments to IFRS 10,  
IFRS 11 and IFRS 12
Transition Guidance –  
Amendments to IFRS 10,  
IFRS 11 and IFRS 12
IASB effective date financial year commencing on/after 
1 January 2013 – EU-adopted IFRS effective date 
financial year commencing on/after 1 January 2014
IFRS Amendments to IFRS 10,  
IFRS 12, and IAS 27
Investment entities –  
Amendments to IFRS 10,  
IFRS 12 and IAS 27
IASB effective date financial year commencing on/after 
1 January 2014 – EU-adopted IFRS effective date 
financial year commencing on/after 1 January 2014
IFRS Amendments to IAS 32 Offsetting financial assets and  
financial liabilities
IASB effective date financial year commencing on/after 
1 January 2014 – EU-adopted IFRS effective date 
financial year commencing on/after 1 January 2014
IFRS Amendments to IAS 36 Recoverable amount disclosures  
for non-financial assets
IASB effective date financial year commencing on/after 
1 January 2014 – EU-adopted IFRS effective date 
financial year commencing on/after 1 January 2014
IFRS Amendments to IAS 39 Novation of derivatives and 
continuation of hedge accounting
IASB effective date financial year commencing on/after 
1 January 2014 – EU-adopted IFRS effective date 
financial year commencing on/after 1 January 2014
The Directors anticipate that the above Standards will be adopted in the Group’s financial statements for the period commencing 1 October 
2014 and that their adoption will have no material impact on the financial statements of the Group. There are other standards and 
interpretations in issue but these are not considered to be relevant to the Group.
Strategic Review
43 CareTech Holdings PLC Annual Report and Accounts 2014
Governance Financial Statements
Notes to the Financial Statements (e) Intangible assets and goodwill
All business combinations are accounted for by applying the acquisition 
method. 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.
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 3–20 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 cash flows.
(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 
cash flows 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 Consolidated Statement of Comprehensive Income are 
presented within finance costs or finance income or other financial 
items, except for impairment of trade receivables which is presented 
within other administrative expenses.
2 Accounting policies (continued)
(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
Subsidiaries are entities controlled by the Group. Control exists 
when the Group has the power, directly or indirectly, to govern the 
financial and operating policies of an entity so as to obtain benefits 
from its activities. In assessing control, potential voting rights that 
are currently exercisable or convertible are taken into account.  
The financial statements of subsidiaries are included in the 
consolidated financial statements from the date that control 
commences until the date that control ceases. Intercompany 
transactions are eliminated on consolidation.
(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 below.
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.
44 CareTech Holdings PLC Annual Report and Accounts 2014
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 cash flows, 
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 cash flows 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)
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.
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.
Derivative financial instruments and hedging
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 unless the derivative is designated and effective 
as a hedging instrument, in which event the timing of the recognition 
in the Consolidated Statement of Comprehensive Income depends  
on the nature of the hedge relationship. The Group does not apply 
hedge accounting to these financial instruments. 
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.
Strategic Review
45 CareTech Holdings PLC Annual Report and Accounts 2014
Governance Financial Statements (m) Revenue
Revenue in respect of the provision of care and fostering comprises 
the fair value of fee income receivable for the year and is recognised in 
respect of the day’s care that has been provided in the relevant period. 
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 invoiced in advance is included in 
deferred income until the service is provided.
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.
(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 4.
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.
The Group accounts for sale and leaseback transactions according to 
the nature of the lease arrangement which arises. Transactions which 
give rise to an operating lease, in which substantially all the risks and 
rewards of ownership are transferred, result in a profit or loss on 
disposal being recognised immediately, if the transaction is at fair 
value, calculated by reference to the sale price and the previous 
carrying value. Profits or losses arising on transactions giving rise to  
a finance lease, where the Group retains substantially all the risks and 
rewards of ownership, are deferred and amortised over the shorter  
of the lease term and the life of the asset.
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 7.
(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 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 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 cash flows at a  
pre-tax risk-free rate.
46 CareTech Holdings PLC Annual Report and Accounts 2014
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 39 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
Accounting for business combinations
From 1 October 2009 the Group has applied IFRS 3 Business 
Combinations (2008) in accounting for business combinations. 
Business combinations are accounted for using the acquisition 
method as at the acquisition date, which is the date on which control 
is transferred to the Group. Control is the power to govern the 
financial and operating policies of an entity so as to obtain benefits 
from its activities. In assessing control, the Group takes into 
consideration potential voting rights that currently are exercisable.
Acquisitions on or after 1 October 2009
For acquisitions on or after 1 October 2009, the Group measures 
goodwill at the acquisition date as:
 – the fair value of the consideration transferred; plus
 – the recognised amount of any non-controlling interests in the 
acquiree; plus
 – if the business combination is achieved in stages, the fair value  
of the existing equity interest in the acquiree; less
 – the net recognised amount of the identifiable assets acquired  
and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised 
immediately in the Consolidated Statement of Comprehensive Income.
The consideration transferred does not include amounts related to the 
settlement of pre-existing relationships. Such amounts are generally 
recognised in the Consolidated Statement of Comprehensive Income.
Costs related to the acquisition, other than those associated with the 
issue of debt or equity securities, that the Group incurs in connection 
with a business combination are expensed as incurred.
Any contingent consideration payable is recognised at fair value at the 
acquisition date. If the contingent consideration is classified as equity, 
it is not remeasured and settlement is accounted for within equity. 
Otherwise, subsequent changes to the fair value of the contingent 
consideration are recognised in finance income or expense in the 
Consolidated Statement of Comprehensive Income.
When share-based payment awards (replacement awards) are  
required to be exchanged for awards held by the acquiree’s 
employees (acquiree’s awards) and relate to past services, then  
all or a portion of the amount of the acquirer’s replacement awards is 
included in measuring the consideration transferred in the business 
combination. This determination is based on the market-based value 
of the replacement awards compared with the market-based value  
of the acquiree’s awards and the extent to which the replacement 
awards relate to past and/or future service.
Transaction costs, other than those associated with the issue of  
debt or equity securities, that the Group incurred in connection  
with business combinations were expensed in the Income Statement.
Strategic Review
47 CareTech Holdings PLC Annual Report and Accounts 2014
Governance Financial Statements 3 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 2014, for the year ended 30 September 2013 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 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
Year ended 30 September 2013
Continuing Operations
ALD MH Adult YPR FC Learning Children Total
Client Capacity 1,423 161 1,584 149 383 – 532 2,116
Revenue (£000) 73,843 6,543 80,386 19,644 14,293 – 33,937 114,323
Underlying EBITDA (£000) 18,538 2,158 20,696 6,215 4,313 – 10,528 31,224
Reconciliation of EBITDA to profit before tax:
2014
£000
2013
£000
Underlying EBITDA before unallocated costs 35,626 31,224
Unallocated costs (4,973) (4,822)
Underlying EBITDA 30,653 26,402
Depreciation (3,350) (3,174)
Amortisation (4,422) (3,721)
Share-based payments charge (50) (59)
Non-underlying items (2,377) 13,454
Operating profit 20,454 32,902
Financial expenses (7,963) (4,814)
Profit before tax 12,491 28,088
Taxation (81) (3,721)
Profit after tax 12,410 24,367
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.
48 CareTech Holdings PLC Annual Report and Accounts 2014
Notes to the Financial Statements
continued 4 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. Non-underlying items comprise the following:
Note
2014
£000
2013
£000
Acquisition expenses 250 2,409
Integration, reorganisation and redundancy costs (i) 2,127 1,441
Acquisition and development costs 2,377 3,850
Gain recognised in respect of business combinations (ii) – (18,532)
Adjustments for minimum future lease payment uplift to IAS 17 (note 24) (iii) – 1,155
Onerous lease provision (iv) – 73
Included in EBITDA 2,377 (13,454)
Amortisation of intangible assets (note 12) 4,422 3,721
Included in administrative expenses 6,799 (9,733)
Fair value movements relating to derivative financial instruments (v) (489) (1,668)
Charges relating to derivative financial instruments (note 7) (v) 912 763
Included in financial expenses 423 (905)
Tax on non-underlying items (note 8):
Current (vi) (1,384) (799)
Deferred tax (vii) (2,112) 1,128
Included in taxation (3,496) 329
Total non-underlying items (3,726) (10,309)
(i)  The Group incurred a number of costs relating to the integration of recent acquisitions and reorganisation of the internal operating and management 
structure and redundancy costs totalling £2,127,000 (2013: £1,441,000). Included in the cash flow statement are acquisition expenses of £862,000  
(2013: £2,130,000) and integration and reorganisation costs of £1,633,000 (2013: £2,263,000), which were paid in the year.
(ii)  During the year the Group entered into a Business Combination which resulted in a credit to the non-underlying earnings of £18,532,000.
(iii)  Adjustments relate to non-cash additional charges under IAS 17 which incorporates recognising the effect of minimum future lease payment uplifts on  
a straight-line basis.
(iv)  The present value of the future cash flows 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 £nil (2013: £73,000) being the present value of any onerous 
element of the remaining lease life. At the balance sheet date the balance on the provision was £420,000 arising on a business combination (see note 24).
(v)  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. 
(vi)  Represents the current tax on items (i), (iii), (iv), and (v) above and an adjustment of £1,000,000 exceptional adjustment in respect of prior year corporation tax.
(vii)  Deferred tax arises in respect of the following:
2014
£000
2013
£000
Derivative financial instruments (note v) (107) 551
Changes in future tax rates – (2,712)
Full provision for deferred tax under IAS 12 336 158
Business combinations (note ii) – 4,381
Other adjustments 1,883 (1,250)
2,112 1,128
5 Auditor’s remuneration
2014
£000
2013
£000
Audit of these financial statements 112 90
Amounts receivable by the auditor and their associates in respect of:
Audit of financial statements of subsidiaries pursuant to legislation 26 14
All other services 33 20
Other services relate to Company Secretarial and Corporate Governance Services.
Strategic Review
49 CareTech Holdings PLC Annual Report and Accounts 2014
Governance Financial Statements 6 Staff numbers and costs
The average number of staff employed by the Group (including Directors) during the year, analysed by category, was as follows:
Number of employees
2014 2013
Operational and service delivery staff 3,340 3,100
Maintenance 17 17
Management and administration 174 167
3,531 3,284
The aggregate payroll costs of these people were as follows:
2014
£000
2013
£000
Wages and salaries 57,552 52,262
Share-based payments charge 50 59
Social security costs 4,915 4,071
Other pension costs 577 290
63,094 56,682
7 Finance expenses
2014
£000
 2013 
£000
Interest expense on financial liabilities at amortised cost:
On bank loans and overdrafts 7,318 5,531
Finance charges in respect of finance leases 222 188
Financial expenses before adjustments 7,540 5,719
Derivative financial instruments (note 4) 423 (905)
7,963 4,814
In accordance with the revision to IAS 23, borrowing costs at £360,000 (2013: £483,000) have been capitalised in the year. The capitalisation 
rate used to determine the amount of borrowing costs capitalised is 5%.
8 Taxation
(a) Recognised in the Consolidated Statement of Comprehensive Income
2014
£000
2013
£000
Current tax expense
Current year 3,797 4,017
Current tax on non-underlying items (note 4) (949) (799)
Corporation tax overprovided in previous periods (1,000) (242)
Total current tax 1,848 2,976
  
Deferred tax expense
Current year 345 (383)
Deferred tax on non-underlying items (note 4) (2,112) 1,128
Total deferred tax (1,767) 745
Total tax in the Consolidated Statement of Comprehensive Income (81) 3,721
50 CareTech Holdings PLC Annual Report and Accounts 2014
Notes to the Financial Statements
continued 8 Taxation (continued)
(b) Reconciliation of effective tax rate 
2014
£000
2013
£000
Profit before tax for the year 12,491 28,088
Tax using the UK corporation tax rate of 22% (2013: 23.5%) 2,748 6,601
Non-deductible expenses 1,108 1,497
Effect of changes in future tax rate – (2,712)
Other deferred tax adjustments (2,775) (1,423)
Corporation tax overprovided in previous periods (1,000) (242)
Total tax in the Consolidated Statement of Comprehensive Income 81 3,721
In the 2014 Budget it was announced that the main rate of corporation tax will fall to 21% with effect from 1 April 2014 and to 20% from  
1 April 2015.
9 Earnings per share
2014
£000
2013
£000
Profit attributable to ordinary shareholders 12,410 24,367
Weighted number of shares in issue for basic earnings per share 52,011,178 51,255,460
Effects of share options in issue 21,271 3,128
Weighted number of shares for diluted earnings per share 52,032,449 51,258,588
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)
Basic 23.86p 47.54p
Diluted 23.85p 47.54p 
10 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 impact the trading performance of the Group.
2014
£000
2013
£000
Profit attributable to ordinary shareholders 12,410 24,367
Non-underlying items (note 4) 3,726 (10,309)
Underlying profit attributable to ordinary shareholders 16,136 14,058
Underlying earnings per share (pence per share)
Basic 31.02p 27.43p
Diluted 31.01p 27.43p
Strategic Review
51 CareTech Holdings PLC Annual Report and Accounts 2014
Governance Financial Statements 11 Property, plant and equipment 
Land and
 buildings
£000
Motor
vehicles
£000
Fixtures,
 fittings and
 equipment
£000
Total
£000
Cost
At 1 October 2012 184,367 4,561 17,328 206,256
Acquisitions through business combinations 47,570 – – 47,570
Additions 2,720 844 3,054 6,618
Disposals (4,212) (108) (3,728) (8,048)
At 30 September 2013 230,445 5,297 16,654 252,396
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
Depreciation and impairment 
At 1 October 2012 3,467 2,257 8,413 14,137
Depreciation charge for the year 603 529 2,042 3,174
Disposals (199) (61) (3,223) (3,483)
At 30 September 2013 3,871 2,725 7,232 13,828
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
Net book value
At 1 October 2012 180,900 2,304 8,915 192,119
At 30 September 2013 226,574 2,572 9,422 238,568
At 30 September 2014 227,859 3,632 11,818 243,309
Included in the result for the year is a profit of £85,000 (2013: £50,000 profit) on the disposal of freehold property, plant and equipment  
and motor vehicles. Included in fixed assets are amounts held under finance leases of £3,835,000 (2013: £2,072,000).
Land and buildings
The net book value of land and buildings is split as follows:
2014
£000
2013
£000
Freehold 227,859 226,114
Short leasehold improvements – 460
227,859 226,574
The Group’s freehold property portfolio was independently valued at £275m (£225m as part of the refinancing in July 2012 and £50m as part 
of the business combinations in July 2013). All of the Group’s freehold properties are pledged as security for bank borrowings.
52 CareTech Holdings PLC Annual Report and Accounts 2014
Notes to the Financial Statements
continued 12 Intangible assets
Goodwill
£000
Software
and licences
£000
Customer
relationships
£000
Total
£000
Cost
At 1 October 2012 31,120 2,437 40,330 73,887
Additions – 1,366 – 1,366
At 30 September 2013 31,120 3,803 40,330 75,253
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
Amortisation and impairment 
At 1 October 2012 – 1,779 7,653 9,432
Amortisation for the year – 232 3,489 3,721
At 30 September 2013 – 2,011 11,142 13,153
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
Net book value
At 1 October 2012 31,120 658 32,677 64,455
At 30 September 2013 31,120 1,792 29,188 62,100
At 30 September 2014 36,037 3,563 27,263 66,863
Amortisation
The amortisation charge is recognised in the following line items in the Consolidated Statement of Comprehensive Income:
2014
£000
2013
£000
Administrative expenses 4,422 3,721
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:
2014 2013
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% –
In preparing value in-use calculations for cash-generating units, cash flow 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.
Strategic Review
53 CareTech Holdings PLC Annual Report and Accounts 2014
Governance Financial Statements 12 Intangible assets (continued)
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:
2014
£000
2013
£000
Adult Learning Disabilities division 17,857 17,857
Mental Health division 774 1,140
Adult 18,631 18,997
Young People Residential Services division 5,326 4,245
Foster Care division 7,162 7,878
Learning Services division 4,918 –
Children 17,406 12,123
36,037 31,120
13 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
2014
%
2013
%
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
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
54 CareTech Holdings PLC Annual Report and Accounts 2014
Notes to the Financial Statements
continued 13 Group undertakings  (continued)
Registered
Company Number Country of incorporation
Class of 
shares held
Ownership
2014
%
2013
%
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
Caretech Fostering Holdings Limited 07206363 England and Wales Ordinary 100
a
100
Caretech Fostering Services Limited 07205262 England and Wales Ordinary 100
m
100
Park Foster Care Services Scotland Limited SC427502 Scotland Ordinary 100
a
100
TLC (Wales) Independent Fostering Limited 04824925 Wales Ordinary 100
l
100
EQL Solutions Limited 08758477 England Ordinary 100 –
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
Strategic Review
55 CareTech Holdings PLC Annual Report and Accounts 2014
Governance Financial Statements 13 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 2014 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 2014 as detailed above with the exception of CareTech Community Services Limited, 
Hazeldene UK Limited and EQL Solutions 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 H20 Limited will not be covered by the parent company guarantee as it is incorporated 
in Gibraltar. EQL Solutions Limited will not take the exemptions as it is Group policy to audit all acquisitions in their first year of trading within 
the Group. 
14 Trade and other receivables
2014
£000
2013 
£000
Trade receivables (note 23) 5,700 6,500
Other debtors and prepayments 2,975 1,554
8,675 8,054
15 Cash and cash equivalents
2014  
£000
2013  
£000
Cash and cash equivalents per balance sheet 3,900 3,783
Cash and cash equivalents per cash flow statement 3,900 3,783
16 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 23.
2014  
£000
2013  
£000
Non-current liabilities
Secured bank loans 158,605 163,224
Finance lease liabilities 2,206 1,427
160,811 164,651
Current liabilities
Current portion of secured bank loans 7,593 6,950
Current portion of finance lease liabilities 1,629 645
9,222 7,595
Terms and debt repayment schedule 
Currency
Nominal
interest rate
(%)
Year of
maturity
Book value
2014
£000
Book value
2013
£000
Term loan £ 3.25 (2013: 3.25)
1
2017 129,462 135,721
Revolving credit facility term loan £ 3.25 (2013: 3.25)
1
2017 36,736 34,453
166,198 170,174
1   The margin on the facilities has initially been set at 3.5% over LIBOR for six months but reduces after that based on the ratio of the Group’s net debt to EBITDA. 
The overall margin is expected to be 3.25% over LIBOR.
At 30 September 2014 the Group has available bank facilities totalling £171.2m, sufficient, with cash flow 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 tangible fixed assets of the Group.
56 CareTech Holdings PLC Annual Report and Accounts 2014
Notes to the Financial Statements
continued 16 Interest-bearing loans and borrowings  (continued)
Finance lease liabilities
Finance lease liabilities are payable as follows:
Minimum 
lease 
payments  
2014  
£000
Interest  
2014  
£000
Principal  
2014
£000
Minimum 
lease 
payments  
2013  
£000
Interest  
2013  
£000
Principal  
2013  
£000
Less than one year 1,787 158 1,629 852 207 645
Between one and five years 2,646 440 2,206 1,824 397 1,427
4,433 598 3,835 2,676 604 2,072
17 Trade and other payables
2014
£000
2013
£000
Trade payables 3,473 2,127
Accrued expenses 11,169 9,706
14,642 11,833
18 Deferred tax assets and liabilities 
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
2014 2013
Assets  
£000
Liabilities  
£000
Assets  
£000
Liabilities  
£000
Property, plant and equipment 4,337 – 5,138
Intangible assets 13,303 – 14,617
Derivative financial instruments 44 (66) –
Share-based payments (119) – (359) –
Rolled-over gains on property, plant and equipment 3,037 – 3,037
Tax (assets)/liabilities (119) 20,721 (425) 22,792
Net of tax assets (119) (425)
Net deferred tax liabilities 20,602 22,367
There are no unrecognised deferred tax assets or liabilities.
Movement in deferred tax during the 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
Movement in deferred tax during the previous year
1 October
2012
£000
Recognised
in income
£000
Acquired in
business
combination
£000
30 September
2013
£000
Property, plant and equipment 5,348 (210) – 5,138
Intangible assets 13,509 1,108 – 14,617
Rolled-over gains 4,231 (1,194) – 3,037
Derivative financial instruments (1,052) 986 – (66)
Share-based payments (414) 55 – (359)
21,622 745 – 22,367
Strategic Review
57 CareTech Holdings PLC Annual Report and Accounts 2014
Governance Financial Statements 19 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 £577,000 (2013: £290,000) of which £199,000 (2013: £29,000) 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 a hurdle.
Options granted under the above schemes, together with those remaining at 30 September 2014, are as follows:
Date of grant Scheme
Options
granted
Options
lapsed to
30 Sept
2014
Options
 exercised to
30 Sept
2014
Options
remaining
30 Sept
2014
Option price
(pence)
13 October 2005
1
Approved Scheme 627,375 (311,440) (248,378) 67,557 169
7 November 2005
1
SAYE Scheme 186,033 (43,519) (142,514) 0 136
2 August 2006
1
Approved Scheme 52,427 (43,764) (3,424) 5,239 292
2 August 2006
1
Unapproved Scheme 8,220 (8,220) 0 0 292
17 January 2007
1
Approved Scheme 162,885 (113,091) (23,236) 26,558 345
17 January 2007
1
Unapproved Scheme 18,263 (10,103) (5,785) 2,375 345
21 March 2007
1
Approved Scheme 6,077 0 0 6,077 452
1 February 2008
1
SAYE Scheme 101,397 (101,397) 0 0 440
2 May 2008
1
Approved Scheme 114,070 (80,939) (138) 32,993 410
2 May 2008
1
Unapproved Scheme 23,843 (19,278) 0 4,565 410
14 April 2009
1,2
Unapproved Scheme 92,308 (92,308) 0 0 0.5
4 August 2009
1
Approved Scheme 191,121 (117,789) 0 73,332 332.5
4 August 2009
1
Unapproved Scheme 165,050 (114,574) 0 50,476 332.5
12 August 2009
1
SAYE Scheme 202,069 (151,675) (1,183) 49,211 254
3 August 2010
1
Approved Scheme 283,754 (174,386) 0 109,368 305
3 August 2010
1
Unapproved Scheme 210,653 (149,577) 0 61,076 305
3 August 2010
2
Unapproved Scheme 92,308 (92,308) 0 0 0.5
15 November 2010 Approved Scheme 8,108 0 0 8,108 370
15 November 2010 Unapproved Scheme 18,243 0 0 18,243 370
4 April 2012
3
Executive Shared Ownership Plan 1,608,337 (261,668) 0 1,346,699 153.1
1 Scheme grant of options which have reached maturity.
2  Grant of nominal cost options subject to the terms of the unapproved scheme amended rules which include specific performance criteria determining  
the level and extent of exercisability. These criteria are set out below.
 Over the performance period, if:
 (i)   share price growth is less than 50% then the option shall not vest and shall not be exercisable and the option shall lapse;
 (ii)  share price growth is equal to 50% then the option shall vest and become exercisable over 33% of the shares under option;
 (iii)  share price growth is equal to 75% then the option shall vest and become exercisable over 50% of the shares under option;
 (iv)  share price growth is equal to 100% then the option shall vest and become exercisable over 100% of the shares under option; and
 (v)   share price growth falls between the above share price targets then the extent to which the option will vest and the number of  
shares under option in respect of which the option may be exercised will be determined on a straight-line basis between these points.
3  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.
 (ii)   EPS Target requires the growth in the Company’s Adjusted 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 10th 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.
58 CareTech Holdings PLC Annual Report and Accounts 2014
Notes to the Financial Statements
continued 19 Employee benefits (continued)
The CareTech Holdings 2005 Approved Share Option Scheme
The number and weighted average exercise price of share options is as follows:
2014 2013
Number  
of share  
options
Weighted  
average  
exercise 
price  
£
Number  
of share  
options
Weighted  
average  
exercise 
price  
£
Outstanding at the beginning of year 395,986 3.01 476,206 2.99
Granted during year – – 17,751 1.69
Lapsed during year (57,834) (3.18) (80,220) (2.92)
Exercised during year (8,920) (1.69) (17,751) (1.69)
Outstanding at end of year 329,232 3.57 395,986 3.01
Outstanding and exercisable at end of year 329,232 3.57 234,335 2.95
The options outstanding at 30 September 2014 were exercisable at prices between 169p and 452p. The weighted average remaining 
contractual life of those options yet to vest is 0 years.
The fair value of services received in return for share options granted are measured by reference to the fair value of share options granted.  
The estimate of the fair value of the services received is measured based on the Black-Scholes model. The inputs into the Black-Scholes  
model are as follows:
2014 2013
Weighted average share price £2.10 £2.10
Weighted average exercise price £3.00 £3.00
Expected volatility 30% 30%
Expected life in years 3 3
Risk free rate range 3%–5% 3%–5%
Dividend yield 1.1% 1.1%
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous two years. The expected  
life used in the model has been adjusted, based on management’s best estimate for the effects of non-transferability exercise restrictions  
and behavioural considerations.
The estimate of the fair value of the services received in relation to the granting of the nominal cost share options is measured by reference  
to the Monte Carlo simulation model.
The CareTech Holdings 2005 Approved Share Option Scheme
The number and weighted average exercise price of share options is as follows:
2014 2013
Number  
of share  
options
Weighted  
average  
exercise 
price  
£
Number  
of share  
options
Weighted  
average  
exercise 
price  
£
Outstanding at the beginning of year 137,718 3.28 283,142 2.72
Lapsed during year (983) (3.05) (145,424) (2.19)
Outstanding at end of year 136,735 3.28 137,718 3.28
Outstanding and exercisable at end of year 136,735 3.28 57,416 3.39
The options outstanding at 30 September 2014 were exercisable at prices between 0.5p and 410p. The weighted average remaining 
contractual life of those options yet to vest is 0 years.
Strategic Review
59 CareTech Holdings PLC Annual Report and Accounts 2014
Governance Financial Statements 19 Employee benefits  (continued)
The fair value of services received in return for share options granted are measured by reference to the fair value of share options granted. 
The estimate of the fair value of the services received is measured based on the Black-Scholes model. The inputs into the Black-Scholes 
model are as follows: 
2014 2013
Weighted average share price £2.10 £2.10
Weighted average exercise price £2.39 £2.39
Expected volatility 30% 30%
Expected life in years 3 3
Risk free rate range 3%–5% 3%–5%
Dividend yield 1.1% 1.1%
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous two years. The expected  
life used in the model has been adjusted, based on management’s best estimate for the effects of non-transferability exercise restrictions  
and behavioural considerations.
The estimate of the fair value of the services received in relation to the granting of the nominal cost share options is measured by reference  
to the Monte Carlo simulation model.
The CareTech Holdings 2005 Save As You Earn Scheme
The number and weighted average exercise price of share options is as follows:
2014 2013
Number  
of share  
options
Weighted  
average  
exercise 
price  
£
Number  
of share  
options
Weighted  
average  
exercise 
price  
£
Outstanding at the beginning of year 62,352 2.54 65,066 2.54
Lapsed during year (13,141) (2.54) (2,714) (2.54)
Outstanding at end of year 49,211 2.54 62,352 2.54
Outstanding and exercisable at end of year 49,211 2.54 62,352 2.54
The above options vested on 1 October 2012.
The fair value of services received in return for share options granted are measured by reference to the fair value of share options granted. 
The estimate of the fair value of the services received is measured based on the Black-Scholes model. The inputs into the Black-Scholes 
model are as follows:
2014 2013
Weighted average share price £2.10 £2.10
Weighted average exercise price £2.89 £2.89
Expected volatility 30% 30%
Expected life in years 3 3
Risk free rate 3%–5% 3%–5%
Dividend yield 1.1% 1.1%
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous two years. The expected  
life used in the model has been adjusted, based on management’s best estimate for the effects of non-transferability exercise restrictions  
and behavioural considerations.
60 CareTech Holdings PLC Annual Report and Accounts 2014
Notes to the Financial Statements
continued 20 Share capital
2014  
£000
2013  
£000
Allotted, called up and fully paid:
52,016,248 (2013: 52,007,328) ordinary shares of 0.5p each 260 260
53,402 deferred shares of 0.5p each – –
260 260
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: 
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
2013
At
1 October
 2012
Issued in
connection
with
acquisitions
Issued
following
share option
exercises Placing
At
30 September
2013
Ordinary shares of 0.5p each 51,195,242 794,335 17,751 – 52,007,328
Deferred shares of 0.5p each 53,402 – – – 53,402
On 4 April 2012 the Company issued a total of 1,608,337 new ordinary shares of 0.5p in the Company in connection with the Company’s 
Executive Shared Ownership Plan 2012 (the “Share Plan”). The New Ordinary Shares were jointly acquired by the employee benefit trust 
(managed independently by EES Trustees International Limited) and award recipients, at the closing market price as at 4 April 2012 of 140.5p.
Reserves
Share premium – in 2013 794,335 shares were issued in part consideration of the business combination for a value of £1,462,000. During the 
year £15,000 of new shares were issued in respect of an Employee Share Option Scheme. In 2013 £50,000 of transaction costs associated  
with the issue of new shares has been charged to the share premium account.
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). 
21 Dividends 
The aggregate amount of dividends comprises:
2014 
£000
2013  
£000
Final dividends paid in respect of prior year but not recognised as liabilities in that year 2,430 2,196
Interim dividends paid in respect of the current year – 1,118
Aggregate amount of dividends paid in the financial year 2,430 3,314
The aggregate amount of dividends proposed and not recognised as liabilities as at the year end is 5.40p per share, £2,808,878 (2013: 4.68p  
per share, £2,433,943).
Strategic Review
61 CareTech Holdings PLC Annual Report and Accounts 2014
Governance Financial Statements 22 Business combinations
(a) Acquisitions 2014
On 4 November 2013 CareTech acquired a Learning Services business now operating as EQL Solutions Limited.
Book values
£000
Fair value
adjustment
£000
Total
£000
Property, plant and equipment 40 – 40
Trade and other receivables 225 (25) 200
Cash – – –
Trade and other payables (1,067) – (1,067)
Corporation tax – – –
Onerous contracts (606) (1,655) (2,261)
Onerous leases – (736) (736)
Net liabilities on acquisition (3,824)
Goodwill arising on business combination 4,918
Satisfied by cash paid 1,094
The Directors have considered whether there are any identifiable intangible assets within the assets acquired and none have been identified.
Goodwill represents the excess of price paid over the net assets acquired as per the table above. Refer to Learning Division in note 3 for the 
results since acquisition. 
(b) Reconciliation to Group Cash Flow
2014
£000
2013
£000
Cash consideration paid on acquisitions in the year 1,094 38,319
Cash consideration paid on previous year’s acquisitions – 395
1,094 38,714
Deferred and contingent consideration payable
2014  
£000
2013  
£000 
Deferred consideration:
Due within one year – 52
– 52
(c) Pro forma results
The 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:
2014  
£000
2013  
£000
Revenue 124,020 114,323
Operating profit 30,658 26,384
62 CareTech Holdings PLC Annual Report and Accounts 2014
Notes to the Financial Statements
continued 23 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 £12,000 
(2013: £105,000).
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:
2014  
£000
2013  
£000
Not due 4,576 4,924
Not more than three months past due 1,124 871
More than three months but not more than six months past due – 705
Trade receivables (note 14) 5,700 6,500
The movement in provisions for impairment of trade receivables are as follows:
£000
At 1 October 2012 695
Charged to the Consolidated Statement of Comprehensive Income 105
At 1 October 2013 800
Charged to the Consolidated Statement of Comprehensive Income 12
At 30 September 2014 812
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 £25m at LIBOR fixed at 1.15%;
 – a 4½ year swap commencing 17 July 2012 at pre-determined amounts initially starting at £34m at LIBOR fixed at 1.15%;
 – a 4½ year swap commencing 17 July 2012 at pre-determined amounts initially starting at £32m at LIBOR fixed at 1.13%;
 – a 4½ year swap commencing 17 July 2012 at pre-determined amounts initially starting at £16m at LIBOR fixed at 1.15%; and
 – a 4½ year swap commencing 17 July 2012 at pre-determined amounts initially starting at £14m at LIBOR fixed at 1.15%.
Strategic Review
63 CareTech Holdings PLC Annual Report and Accounts 2014
Governance Financial Statements 23 Financial instruments  (continued)
Liquidity risk
The Group prepares annual cash flow forecasts reflecting known commitments and anticipated projects. Borrowing facilities are arranged  
as necessary to finance requirements. The Group has available bank facilities, sufficient, with cash flow 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 cash flow maturities.
2014
Effective
interest rate  
%
Carrying
amount
£000
Contractual
cash flows
£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) –
Deferred and contingent consideration – – – – – –
Derivative financial instruments – – – – – –
(184,675) (209,986) (32,962) (177,024) –
2013
Effective
interest rate  
%
Carrying
amount
£000
Contractual
cash flows
£000
< 1 year
£000
1–5 years
£000
5 years
and over
£000
Trade and other payables – (11,833) (11,833) (11,833) – –
Secured bank loans 5% (170,174) (203,335) (15,286) (188,049) –
Finance lease liabilities 11% (2,072) (2,676) (852) (1,824) –
Deferred and contingent consideration – (52) (52) (52) – –
Derivative financial instruments – (332) (332) (101) (231) –
(184,463) (218,228) (28,124) (190,104) –
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:
2014  
£000
2013  
£000
Net debt (see page 42) 166,133 168,463
Equity (see page 40) 109,159 98,742
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 5.40p 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 2014, 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 £450,000 (2013: £500,000). Hedging instruments have been included in this calculation.
64 CareTech Holdings PLC Annual Report and Accounts 2014
Notes to the Financial Statements
continued 23 Financial instruments  (continued)
Fair values
The fair values together with the carrying amounts shown in the balance sheet are as follows:
Carrying 
amount
2014
£000
Fair  
value
2014
£000
Carrying 
amount
2013
£000
Fair  
value
2013
£000
Loans and receivables:
Cash at bank and in hand (note 15) 3,900 3,900 3,783 3,783
Trade receivables (note 14) 5,700 5,700 6,500 6,500
Amortised cost:
Trade payables (note 17) (3,473) (3,473) (2,127) (2,127)
Secured bank loans (note 16) (166,198) (166,198) (170,174) (170,174)
Finance lease liabilities (note 16) 3,835 3,835 (2,072) (2,072)
Held at fair value through profit and loss:
Derivative financial instruments 156 156 (332) (332)
Where market values are not available, fair values of financial assets and liabilities have been calculated by discounting expected future cash 
flows 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 marketplace; and
 – 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.
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 (2013: £332,000).
 – 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: Nil (2013: Nil).
 – Level 3 – inputs for the asset or liabilities that are not based on observable market data: Nil (2013: Nil).
24 Operating leases
Non-cancellable operating lease rentals are payable as follows:
2014 2013
Land and 
buildings
£000
Other
£000
Land and 
buildings
£000
Other
£000
Within one year 2,951 136 2,500 102
Between two and five years 5,422 34 4,986 11
More than five years 8,623 – 8,866 –
16,996 170 16,352 113
During the year the following was recognised as an expense in the Consolidated Statement of Comprehensive Income in respect of  
operating leases:
2014 2013
Land and 
buildings
£000
Other
£000
Land and 
buildings
£000
Other
£000
Charge for amounts currently payable 2,426 786 6,292 156
Adjustment for minimum future lease payment uplifts – – 1,155 –
Reversal of minimum future lease payments provision – – (14,342) –
Onerous lease provision – – 73 –
Total recognised in the Consolidated Statement of Comprehensive Income 2,426 786 (6,822) 156
Strategic Review
65 CareTech Holdings PLC Annual Report and Accounts 2014
Governance Financial Statements 24 Operating leases (continued)
Analysis of movement in onerous lease provision
£000
At 1 October 2013 743
Recognised in Statement of Comprehensive Income 72
Utilised in year (815)
At 1 October 2013 –
Arose on business combination 736
Settled in period (316)
At 30 September 2014 420
25 Related parties
During the year, CareTech Community Services Limited paid rent totalling £184,000 (2013: £159,910) in respect of properties in which F. Sheikh 
and H. Sheikh have an interest. At the year end rent of £46,000 (2013: £nil) was outstanding. Dividends paid to Directors in the year totalled 
£47,000 (2013: £98,000).
Transactions with key management personnel
2014
£000
2013
£000
Salary 2,111 1,725
Benefits 206 217
Bonus 269 154
Total short-term remuneration 2,586 2,096
Post employment benefits – 167
Share-based payments – 27
2,586 2,290
Key management personnel are defined as Directors of the Company and members of the Senior Management Team.
Directors’ emoluments are set out on page 36.
66 CareTech Holdings PLC Annual Report and Accounts 2014
Notes to the Financial Statements
continued 26 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 cash flow forecasts 
to derive the “value in use” to the Group of the capitalised goodwill.  
In the assessment undertaken in 2014 value in use was derived from 
discounted 10 to 20 year cash flow 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.
Strategic Review
67 CareTech Holdings PLC Annual Report and Accounts 2014
Governance Financial Statements Share
capital
£000
Share
premium
£000
Merger
reserve
£000
Retained
earnings
£000
Total
equity
£000
At 1 October 2012 256 55,715 8,498 3,019 67,488
Profit for the year – – – 17,858 17,858
Total comprehensive income – – – 17,858 17,858
Issue of shares 4 1,487 – – 1,491
Dividends – – – (3,379) (3,379)
Equity settled share-based payments charge – – – 59 59
Transactions with owners recorded directly in equity 4 1,487 – (3,320) (1,829)
At 30 September 2013 260 57,202 8,498 17,557 83,517
At 1 October 2013
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)
Equity settled share-based payments charge – – – – –
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
68 CareTech Holdings PLC Annual Report and Accounts 2014
Company Statement of Changes in Equity
as at 30 September 2014 Note
2014
£000
2013
£000
Non-current assets
Investments 29 35,301 35,301
Trade and other receivables – 2,258
35,301 37,559
Current assets
Trade and other receivables 30 205,965 218,159
Cash and cash equivalents 29 110
205,994 218,269
Total assets 241,295 255,828
Current liabilities
Loans and borrowings 31 8,550 6,950
Trade and other payables 32 2,393 2,054
10,943 9,004
Non-current liabilities
Loans and borrowings 31 157,885 163,307
157,885 163,307
Total liabilities 168,828 172,311
Net assets 72,467 83,517
Equity
Share capital 33 260 260
Share premium 57,221 57,202
Merger reserve 8,498 8,498
Retained earnings 6,488 17,557
Total equity attributable to equity shareholders of the parent 72,467 83,517
These financial statements were approved by the Board of Directors on 14 January 2015 and were signed on its behalf by:
  
Farouq Sheikh  Michael Hill
Chairman  Finance Director
Company number: 04457287
Strategic Review
69 CareTech Holdings PLC Annual Report and Accounts 2014
Governance Financial Statements
Company Balance Sheet
as at 30 September 2014 2014
£000
2013
£000
Cash flows from operating activities
(Loss)/Profit for the year (8,639) 17,858
Deferred tax – 476
Operating cash flows before movement in working capital (8,639) 18,334
Movement in payables 1,288 (1,607)
Movement in intercompany balance 14,452 (48,834)
Net cash generated from/(used in) operating activities 7,101 (32,107)
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired – –
Cash flows from financing activities
Proceeds from new loan (net of costs) 2,179 34,088
Dividends paid (2,430) (3,379)
Proceeds from the issue of new shares (net of costs) 19 1,491
Repayment of borrowings (6,950) –
Net cash (used in)/generated from financing activities (7,182) 32,200
Net (decrease)/increase in cash and cash equivalents (81) 93
Cash and cash equivalents at 1 October 110 17
Cash and cash equivalents at 30 September 29 110
70 CareTech Holdings PLC Annual Report and Accounts 2014
Company Cash Flow Statement
for the year ended 30 September 2014 (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 loss for the year dealt with in the financial statements of  
the Company was £8,639,000 (2013: £17,858,000 profit).
(b) Investments
Investments in subsidiary undertakings are stated in the balance  
sheet of the Company at cost less amounts written off.
(c) Cash and liquid resources
Cash, for the purpose of the cash flow 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. Subsequent 
measurement of financial assets and financial liabilities are 
described below.
Financial assets are derecognised when the contractual rights to 
the cash flows 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.
Strategic Review
71 CareTech Holdings PLC Annual Report and Accounts 2014
Governance Financial Statements
Company Notes 28 Dividends 
The aggregate amount of dividends comprises:
2014
£000
2013
£000
Final dividends paid in respect of prior year but not recognised as liabilities in that year 2,430 2,196
Interim dividends paid in respect of the current year – 1,183
Aggregate amount of dividends paid in the financial year 2,430 3,379
The aggregate amount of dividends proposed and not recognised as liabilities as at the year end is 5.40p per share, £2,808,878 (2013: 4.68p 
per share, £2,433,943).
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
2014
£000
2013
£000
Amounts owed by Group undertakings 205,965 218,159
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 23.
2014
£000
2013
£000
Non-current liabilities
Secured bank loans 157,885 163,307
2014
£000
2013
£000
Current liabilities
Current portion of secured bank loans 8,550 6,950
Terms and debt repayment schedule
Currency
Nominal  
interest rate
Year of
maturity
Book value
2014
£000
Book value
2013
£000
Term loan £ 3.25 (2013: 3.25)
1
2017 129,646 135,804
Revolving credit facility term loan £ 3.25 (2013: 3.25)
1
2017 36,789 34,453
166,435 170,257
1  The margin on the new facilities has initially been set at 3.5% over LIBOR for six months but reduces after that based on the ratio of the Group’s net debt to the 
EBITDA. The overall margin is expected to be 3.25% over LIBOR.
At 30 September 2014 the Group has available bank facilities totalling £171.2m, sufficient, with cash flow 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.
72 CareTech Holdings PLC Annual Report and Accounts 2014
Company Notes
continued 32 Trade and other payables
2014
£000
2013
£000
Other creditors 2,393 2,054
33 Called up share capital
2014
£000
2013
£000
Allotted, called up and fully paid:
52,016,248 (2013: 52,007,328) ordinary shares of 0.5p each 260 260
53,402 deferred shares of 0.5p each – –
260 260
On 4 April 2012 the Company issued a total of 1,608,337 new ordinary shares of 0.5p in the Company (the “New Ordinary Shares”) in connection with 
the Company’s Executive Shared Ownership Plan 2013 (the “Share Plan”). The New Ordinary Shares were jointly acquired by the employee benefit 
trust (managed independently by EES Trustees International Limited) and award recipients, at the closing market price as at 4 April 2013 of 140.5p.
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 20 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 (2013: £nil).
Share-based payments
There was no expense for share-based payments relating to the Company in the year (2013: £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 19).
35 Directors’ remuneration
The analysis of Directors’ emoluments and share options is included within the Remuneration Report on pages 35 and 36. This analysis  
forms part of these financial statements.
36 Staff numbers and costs
The Company has no employees (2013: none) other than the Directors. Directors’ emoluments are paid by a subsidiary undertaking.
37 Related parties
During the year the Company received dividends of £nil (2013: £17,500,000) interest received of £nil (2013: £6,447,000) and fees of £70,000  
(2013: £70,000) from its subsidiary undertakings. The amount due to the Company from its subsidiary undertakings amounted to £205,965,000 
(2013: £218,159,000).
Strategic Review
73 CareTech Holdings PLC Annual Report and Accounts 2014
Governance Financial Statements 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 (2013: £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 trade receivables as at 30 September are inter-company balances as follows:
2014
£000
2013
£000
Not due 205,965 220,417
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 31) 205,965 220,417
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. 
Liquidity risk
The Company prepares annual cash flow forecasts reflecting known commitments and anticipated projects. Borrowing facilities are arranged 
as necessary to finance requirements. The Company has available bank facilities, sufficient, with cash flow 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 cash flow maturities.
2014
Effective 
interest rate
%
Carrying
amount
£000
Contractual
cash flows
£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) –
2013
Effective 
interest rate
%
Carrying
amount
£000
Contractual
cash flows
£000
< 1 year
£000
1–5 years
£000
5 years
and over
£000
Trade and other payables – (2,054) (2,054) (2,054) – –
Secured bank loans 5% (170,257) (207,298) (16,282) (191,016) –
(172,311) (209,352) (18,336) (191,016) –
74 CareTech Holdings PLC Annual Report and Accounts 2014
Company Notes
continued 38 Financial instruments (continued) 
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:
2014
£000
2013
£000
Net debt 166,406 170,147
Equity 72,467 83,517
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 5.40p 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 2014, 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 £450,000 (2013: £500,000). 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
2014
£000
Fair
value
2014
£000
Carrying
amount
2013
£000
Fair
value
2013
£000
Loans and receivables:
Cash at bank and in hand 29 29 110 110
Trade receivables (note 31) 205,965 205,965 220,417 220,417
Amortised cost:
Other payables (note 33) (2,393) (2,393) (2,054) (2,054)
Secured bank loans (note 32) (166,435) (166,435) (170,257) (170,257)
Where market values are not available, fair values of financial assets and liabilities have been calculated by discounting expected future cash 
flows 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;
 – 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 marketplace.
Strategic Review
75 CareTech Holdings PLC Annual Report and Accounts 2014
Governance Financial Statements 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
Central Milton Keynes
MK9 1LW
Solicitors
Pinsent Masons
City Point
One Ropemaker Street
London EC2Y 9AH
Bankers
The Royal Bank of Scotland PLC
280 Bishopsgate
London EC2M 4RB
Lloyds TSB 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
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CareTech Holdings PLC
Metropolitan House
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Potters Bar
Hertfordshire
EN6 1AG
Tel: 01707 601800
Fax: 01707 655265
www.caretech-uk.com