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Bottom Line: Restricted scope

Thursday 17 February 1994 19:02 EST
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THE 170p flotation price for Goldsborough Healthcare borders on the expensive but has left enough room to ensure a small first day premium.

Assuming Goldsborough had been listed for the year to 2 October, the prospective p/e is 14.8 if it makes pounds 6.55m pre-tax. The rating is one to 1.5 points below its main sectoral rivals such as CrestaCare and Quality Care.

Investors should, however, be aware that the business is of a capital intensive nature. Goldsborough already enjoys occupancy levels of 95 per cent at its 26 homes, restricting the scope for organic growth and making acquisitions a necessity.

While the flotation raises pounds 29m of new money, Goldsborough will start with 15 per cent gearing, which will swiftly rise beyond 50 per cent. A cash call on investors to fund acquisitions could be made as soon as the end of 1995.

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