Quality Care Homes profits advance 64%

THE rapid growth of new home openings lifted pre-tax profits at Quality Care Homes, the nursing home operator, by 64 per cent to pounds 3m in the year to 31 October despite a squeeze on margins from rising wage costs and static fee levels.

A 3p final dividend makes a total of 4.5p, up 12.5 per cent, paid out of earnings 49 per cent higher at 17.5p. The shares eased 1p to 324p.

The company came to the stock market in 1992 at 136p and is 67 per cent owned by its chief executive, Duncan Bannatyne.

Operating margins at QCH, which is based at Darlington, Co Durham, fell from 39.4 to 36.4 per cent.

This reflected a modest pay increase, no change in the fees paid by the Department of Social Security and the impact of initially less profitable new homes.

Apart from a lull in admissions in April and May, QCH has seen little impact from the introduction of the Community Care Act last April, which shifted responsibility for new patients from central government to local authorities. Occupancy stayed above 96 per cent for the year.

In common with other nursing home operators QCH, which runs 17 homes and has another seven under construction, has been expanding rapidly.

During the year to October the number of registered beds rose by 48 per cent to 799. A further 144 beds have brought the total since the year-end to 939 and QCH plans to open a further 254 by the autumn.

Capital spending of pounds 6m was only half funded by cash flow, taking gearing up to 29 per cent.

The group believes it has enough resources to pay for its expansion programme until the end of this year.