Warning of lower profits hits TC shares

Shares in TC Group, Britain's largest nursing home operator, sank to their lowest level for eight years yesterday after the company warned that continuing difficulties in filling new homes would hit profits.

The 25p slide in the shares to 114.5p comes just four months after TC was created from the merger of Takare with Court Cavendish to combat increased competition in the market.

Analysts were dismayed by the latest news, particularly as TC issued a statement in November claiming that trading and occupancy for the enlarged group had been maintained at levels set out at the time of the merger announcement in September.

The new chief executive, Dr Chai Patel, who moved over from Court Cavendish, said: "The underlying business, the established homes, are continuing to do well and at the time we made that statement, that was what we were indicating."

He denied there were difficulties with the merger and blamed the problem on acquired homes, particularly Greenacre, acquired by Court Cavendish last April, along with 13 newer Takare homes built in the past two years.

All had been filling more slowly than budgeted for in the last three months of the year, but the main impact would be in the current year, he said. "We are starting 1997 with less beds filled than would have liked."

Although no new homes will come on stream after May, following a change of strategy last year, there are still 400 new beds in the pipeline.

Massey Lopes of Kleinwort Benson said the profits warning was very disappointing. "The problems don't stem from the merger. They stem from the company's position in the market and its weighting towards newer homes." Every 1 per cent fall in occupancy hit the bottom line by about pounds 2m, he said. He has nudged down his forecast for the year just ended from pounds 19.7m to pounds 18.5m and from pounds 27.9m to pounds 23m for 1997.

The whole nursing home sector has been hit by the continuing squeeze on the budgets of local authorities, the principal source of financing for nursing home residents since the 1993 Community Care Act.

Dr Patel said the continued crisis in local authority funding was at the heart of the issue, with a number of councils warning they were about to run out of money, notably Sefton in Lancashire. But analysts said Takare, whose shares have slid from a high of 289p three years ago, has suffered from its own problems. Forecasts were cut last June after the company warned of problems in filling newer homes.

Paul Saper of independent nursing home analysts Laing & Buisson said TC was suffering from two years of very tight central government budget settlements, but part of its difficulties lay with the Takare product which was "not good". He said the group had been operating 150-bed units when the rest of the sector had 50-bed homes, while they also tended to lack the sort of luxuries such as en suite bathrooms and carpets now demanded by the market.

Mr Patel said occupancy in its established homes remained at the 90 per cent for the old Court Cavendish business and 92 per cent for Takare outlined in September. He refused to specify levels for the problem units.

Life and Style
life
Arts and Entertainment
Diana from the Great British Bake Off 2014
tvProducers confirm contestant left because of illness
News
Brad Pitt and Angelina Jolie reportedly married in secret on Saturday
peopleSpokesperson for couple confirms they tied the knot on Saturday after almost a decade together
Life and Style
Chen Mao recovers in BK Hospital, Seoul
health
PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Client-Side web developer (JQuery, Javascript, UI, JMX, FIX)

Negotiable: Harrington Starr: Client-Side web developer (JQuery, Javascript, U...

Structured Finance

Highly Competitive Salary: Austen Lloyd: CITY - An excellent new instruction w...

SQL Server Developer

£500 per day: Harrington Starr: SQL Server Developer SQL, PHP, C#, Real Time,...

C#.NET Developer

£600 per day: Harrington Starr: C#.NET Developer C#, Win Forms, WPF, WCF, MVVM...

Day In a Page

Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone
Amazon is buying Twitch for £600m - but why do people want to watch others playing Xbox?

What is the appeal of Twitch?

Amazon is buying the video-game-themed online streaming site for £600m - but why do people want to watch others playing Xbox?
Tip-tapping typewriters, ripe pongs and slides in the office: Bosses are inventing surprising ways of making us work harder

How bosses are making us work harder

As it is revealed that one newspaper office pumps out the sound of typewriters to increase productivity, Gillian Orr explores the other devices designed to motivate staff