New accounts filed by Barchester Healthcare Ltd to Companies House in the UK show it recorded the drop in profits despite revenues rising by 5.6% from £495.4m to £523.4m in the 12 months to the end of December 31.
According to chairman John Coleman, the improvement in revenues was underpinned by occupancy in its care homes growing from 10,973 to 11,075.
In his report, Mr Coleman said: “The company has a very strong balance sheet, with minimal debt, which leaves us free to explore ways of investing cash to support future growth in the scale of operations.”
He said trading conditions involve a degree of margin compression, not just for Barchester, but across the sector.
At the end of last year, Barchester was among the top four largest providers in the UK’s long-term care sector. It had 12,834 registered beds across a portfolio of 198 homes and seven independent hospitals.
The group’s report said it “has a significant number of private pay residents”.
The directors said they expect to see continued growth in revenues in the coming year. They said the increase in revenues “was driven primarily by a greater number of residents, with a greater number of available beds and higher occupancy”.
The group’s operating profits fell by 44% from £23.2m to £12.9m, for a number of reasons, including the rent bill increasing by £11m and an increase in non-cash depreciation costs and a £3.8m exceptional cost.
The exceptional costs relates to a non-cash write-off of £2.2m and £1.6m from the restructuring of the senior management team.
The accounts disclose that £314,000 was paid to directors last year for loss of office. The highest paid director was paid £566,000.
The group’s net debt reduced from £17.7m to £7.34m. The board includes two Irish members, John Hegarty and Keith Browne, formerly a partner at KPMG and who now works as an independent consultant.
Accumulated profits at the group last year stood at £178.67m. Shareholder funds totalled £323.76m, that included cash of £11m.
The group’s earnings before interest, tax, depreciation, and amortisation last year totalled £33m compared to £41m in 2013.