Bottom Line: Nursing their money

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The Independent Online
IN VIEW of the after-market debacle that followed the flotation of Court Cavendish last summer, it will be fascinating to see if the stock market's appetite for investment in nursing home companies is robust enough to absorb Goldsborough next month.

Initial signs are that Kunick and NatWest Ventures, each owning 50 per cent of Goldsborough, are not intending to push their luck too far.

Goldsborough plans to raise around pounds 30m in new money while Kunick will sell all its shares in the pounds 65m to pounds 70m flotation, incidentally clearing all its debts. With NatWest retaining some of its shareholding, the market capitalisation of Goldsborough after the flotation is currently expected to be in the pounds 75m to pounds 80m range.

Last year Goldsborough returned to profits of pounds 2.4m and this figure should double in the 12 months to September. Add in interest on the new money being raised and this implies a prospective p/e of around 16, given the expected capitalisation.

Such a rating would be a discount to the market leaders Takare and Westminster, both on prospective p/es of 18 or so.

This is entirely sensible in view of Goldsborough's chequered history within Kunick. The idea of using cash from Kunick's amusement machines to fund new nursing home beds went badly awry two years ago, leaving the current Goldsborough management with much to prove.

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