A nursing home group owned by three Irish billionaires has described lower occupancy rates due to a higher than normal death rate from Covid-19 as an “adverse head-wind” on the business’s outlook.
UK-based Barchester Healthcare is owned by Dermot Desmond, JP McManus and John Magnier. It is among the top four long-term care providers in the UK with in excess of 12,000 registered beds across more than 200 sites, with a focus on London and the southeast.
Accounts recently show that pre-tax profits at the group last year increased by 25.5 per cent to £21.78 million (€24.11m) on revenues that were 5.9 per cent higher at £657.6 million on the back of higher fees and occupancy.
In his report on the outlook for the business, chairman John Coleman said the Covid crisis had an impact on the cash position at the group.
“Unfortunately the global coronavirus pandemic had a dramatic effect during 2020, and occupancy was reduced both due to a higher than normal death rate in spring and reduced admissions.
“The group has performed well despite these adverse head-winds due to a strong balance sheet with good cash reserves.”
Mr Coleman added: “At all times during the crisis the business has remained cash-generative, and has paid all suppliers, interest payments, taxes and any rent due to landlords on time.”
The accounts were signed off in September though they were lodged more recently at Companies House. Mr Coleman said that, at that time, “the business has almost eradicated the virus from its facilities and occupancy is growing with death rates returning to normal levels and the number of new admissions increasing”.
Second spike
He said then that the business was “ very prepared for a second spike of the virus, and therefore any further impact is expected to be much less severe than was seen earlier in the year”.
Mr Coleman pointed out that labour costs had increased during the pandemic due to a large increase in sick pay.
He noted that sick pay rates had been augmented by the company to help employees financially. Barchester had also topped up pay for those on furlough.
He said pressure on group cashflows were mitigated by actions including a reduction in agency staff employed and capital expenditure. He said these were primarily infection-control measures.
Pay to directors in 2019 totalled £3.4 million, with pay to the highest paid director more than doubling from £915,000 to £2 million. Costs for the 15,813 staff employed by Barchester were £341.7 million.
The business was put up for sale with a reported price tag of £2.5 billion in 2018. Early last year Australian infrastructure bank Macquarie pulled out of a deal to purchase the group due to the uncertainty caused by Brexit.
