Exclusive: Ideal sets the pace in transforming sector

THE new care homes business set up by Yorkshire entrepreneur Lawrence Tomlinson is set to nearly double in size this year after hitting £13m turnover and reaching 1,000 beds in its first 12 months of full trading.

Ideal Care Homes, based in Garforth near Leeds, made a £3m profit before tax and interest for the year to March, its first full year of trading, and said it expects to increase this to £7m on a £25m turnover in year two. Interest payments are in the region of £500,000 a year.

The firm, set up after Mr Tomlinson sold his previous care home operation for £175m in 2007, now has 1,032 beds in homes across Yorkshire, the North West and the Midlands. It expects to take this to 2,006 as it expands in the same parts of the country.

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Ideal wants to transform the care sector with its innovative business model, which means residents do not have to drain their savings to pay for the cost of their stay. LNT Construction, part of Mr Tomlinson’s group, designs and builds the upmarket homes, with the majority being run by Ideal.

Mr Tomlinson said of the results: “We have had a really good year. I would have been happy just to break even (knowing) the strength we have in the business going forward.”

Ideal will continue expanding and expects to open 18 further care homes by March 2012 but has said it wants to protect quality rather than dominating “the whole world”. “The second and third years should be easier,” Mr Tomlinson told the Yorkshire Post. “We are concentrating on the areas we are currently in. We will use our existing operations and form clusters. (When) we opened a home in Stoke it filled very quickly and we opened a second home.”

The expansion will see Ideal, which currently has 1,000 staff, take on another 800 workers and create 150 construction jobs.

It comes after the firm agreed a £33m sale and lease-back deal for seven of its properties in December last year and parent company LNT Group won a £67m deal from a club of three banks in November 2009.

Some of that funding, from Royal Bank of Scotland, Bank Leumi and Yorkshire Bank, was spent on buying land for new sites. This includes sales from local authorities which want to offload land, although Ideal always builds its own homes rather than refurbishing existing stock.

Ideal operates care homes on a low-cost basis by building its own assets rather than buying them. The “no top-ups” model was designed to prevent relatives of residents from having to sell their assets to fund their care. Typically care home places are paid for by a combination of the local authority, the resident’s contribution and that of a third party, such as relatives. Ideal’s approach means there is no need for a third party top-up.

Mr Tomlinson said the coalition’s spending cuts had created an opportunity because councils had to provide care more cheaply. “For us the austerity cuts are a very positive thing. It makes local authorities look at their own provision. They see how cost-effective we are and it helps them save money.”

Ideal was set up in 2009 but its first year was spent largely on preparatory work, with only minimal trading. Its high-spec homes include all en-suite accommodation, flat screen televisions, mini fridges, telephone and internet facilities, sensory gardens and in-house cinemas.

Residents include those suffering from Parkinson’s Disease and Huntington’s Disease and people who have had amputations, but Mark Greaves, Ideal’s managing director, said there is no single condition in which the firm specialises. All the staff are given training in how to cope with people who have dementia. On some occasions, residents’ ill-health may mean they move to a hospital, he added.

“There comes a point when that is no longer suitable for their needs. They may need intensive nursing. Whatever position you are in we want people to live to the full with us and die with dignity.”

The homes are run using CoolCare2 Care Home Management Software, part of the IT arm of LNT Group, which also includes an electrical and mechanical installation firm, a transport chemicals business, an executive helicopter business and sports car marque Ginetta. Mr Tomlinson, chairman of parent company LNT, said the group had paid a £1.1m dividend to staff, excluding him, who hold shares in the group.

Fast track to success

Lawrence Tomlinson has been involved in the care sector for more than 25 years. The starting point was in 1988 when he took over the management of a care home owned by his parents.

He sold the original Orchard Care Home operation to a management buyout team in a £175m deal in 2007 and went on to set up Ideal.

The former Batley Grammar schoolboy is worth about £400m today,

The father-of-four is also a serious racing enthusiast and six years ago LNT bought Ginetta Cars under its LNT Automotive banner.

Ginetta is one of the few domestic car manufacturers to have developed a fully working electric car.