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Care UK AGM statement

Company news

Care UK continues to benefit from the increasing trend to involve the private sector more extensively in the delivery of publicly funded health and social care to the NHS and Social Services. Our pipeline of new business opportunities is strong, supporting our expectations for continued growth during the coming years.

In Residential Care Services we successfully commissioned Greville House in Richmond upon Thames and St Vincent's, the second of our developments for the London Borough of Hammersmith & Fulham, is scheduled to open, as planned, in April 2006. Of the two previously announced appointments as preferred bidder, we are pleased to announce that the contract for a new home, Lennox House, has been signed with the London Borough of Islington and that good progress is being made with Poole Borough Council for the joint contract with our Community Care Services division.

In Community Care Services the rate of annual growth in Homecare continues to exceed 20%, primarily through organic growth, and new contracts have been won in Leeds, Lincolnshire and Bournemouth worth over £2m per annum. We are also pleased to have recently completed the acquisition of Ravencare, a Homecare provider in Fleetwood, Lancashire, providing around 2,500 hours of homecare per week.

In Specialist Care Services we have won a new contract to provide care for learning disability service users in Stoke-on Trent valued at c£500k pa and, more generally across the division, we are progressing the expansion of services and properties at several existing facilities. The new 12-bed mental healthcare rehabilitation centre in Croydon previously announced is due to open, as planned, next month. Our foster care service has opened a new London office as part of our strategy to expand regionally.

Within Clinical Care Services, our new business pipeline of opportunities is extremely strong. In addition to the three diagnostic projects for which our partnership with Alliance Medical is bidding, we are also submitting bids for several nationally and locally procured primary care projects. Our joint venture company, Partnership Health Group ("PHG"), has also been invited to bid for projects included in the first phase of wave two of the Independent Sector Treatment Centre ("ISTC") procurement programme.

The implementation phase of the first two ISTCs at Barlborough and Plymouth, both of which opened in Summer 2005, is proceeding well with excellent patient and commissioner feedback. Our focus has been to establish good clinical and patient satisfaction standards and success in this has helped to further enhance our reputation with the Department of Health. Whilst this focus has resulted in some initial cost challenges, progress is now also being made to achieve the targeted financial performance for the ISTCs.

Construction of the two ISTCs at Maidstone and Goodmayes in North East London is progressing as planned. We are also pleased to announce that the contract for the primary care walk-in centre in Newcastle-upon-Tyne has been signed and commercial agreement has been reached for the London Victoria centre and we expect formal contract completion shortly. We anticipate that both units will be operational during the early summer of this year.

After more than ten years service on the Board Sir Tim Chessells has indicated that he will step down as a Director of Care UK following the 2006 Annual General Meeting. The Board is grateful for Sir Tim's significant contribution to the development of the Group during his time on the Board and wishes him well in his future.

The quality of current opportunities for further growth is excellent. The strategic momentum for continued expansion of the private sector's role in the provision of health and social care services is a key part of the Government's programme of reform. In particular, the recent community health and care services White Paper, aimed at more healthcare being delivered outside hospitals, is expected to lead to significant further opportunities for Care UK. Whilst it is inevitable that such system reform will generate local challenges and controversy, the direction of change is highly favourable.

We are pleased with continued progress in the Group's established businesses and, together with the improving performance in PHG and the overall quality of our pipeline opportunities, we have confidence in our future prospects.

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