Specialist social care services provider CareTech traded in line with expectations in the first half of its financial year, with occupancy levels in mature facilities running at around 92%.

In the six months to the end of March the company increased capacity by 121 places to 1,930. Occupancy levels are running at around 87% when facilities being developed are included.

In keeping with its competitors, the group is seeing some fee rate pressure and as a result it is in discussions with a small number of funding authorities who have requested fee reductions, although it is still too early to judge their overall outcome.

On a positive note, Care UK's children fostering operations and Phoenix Therapy are performing well; both acquisitions were announced at the end of last year.

Net debt of £122m at 31 March 2011 was significantly better than management had budgeted for, largely as a result of the decision to walk away from "a number of bolt-on acquisition opportunities".

The company has also indicated that organic growth is now more of a priority, given the current environment, even though they will now have further headroom on their banking facilities and covenants for growth through acquisition. The switch in focus to organic growth means that its directors have lowered their growth expectations.

Farouq Sheikh, chairman of CareTech commented: "The high quality and integrated nature of our range of services places the group in a favourable competitive position to gain market share in a challenging environment of constrained public spending."

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