Care homes group owned by three Irish billionaires sees profits rise in 2019

Barchester Healthcare has now 'almost eradicated the virus from its facilities and occupancy is growing'.

JP McManus. Picture: Seb Daly/Sportsfile

A financial report from a major British care-home chain that is owned by three Irish billionaires has detailed the effects of the Covid-19 fallout on the business. 

New accounts from Barchester Healthcare, which is owned by Dermot Desmond, JP McManus, and John Magnier, show its pre-tax profit last year, before the onset of the pandemic, increased by over 25% to £21.78m (€24.11m) as revenues rose 6% to £657.6m. 

Earnings before interest, depreciation, tax, amortisation and rent, or Ebitdar, rose to £195.9m from £185.1m in 2018.

The group is one of the largest long-term care providers in the UK with 12,000 registered beds, with the largest proportion of its homes in London and in the south-east of England.

The business was put up for sale two years ago with a reported price tag of £2.5bn.  

However, last year, Australian infrastructure bank Macquarie pulled out of a deal to purchase Barchester, blaming the uncertainty caused by Brexit.

On the outlook for the business, chairman John Coleman said in the accounts that “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 headwinds due to a strong balance sheet with good cash reserves,” he said.

He added that "good operational control and delaying capital investment projects has further preserved cash".

He said that additional costs had been incurred in fighting the disease, such as spending on masks and in additional cleaning in communal areas. 

 “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," he said. 

Barchester "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”, according to the accounts.  

The chairman said that the pressures on cash at the group were mitigated by a series of actions, including a reduction in agency staff and capital expenditure. 

For the 2019 financial year, revenues increased helped by higher fees and improved occupancy rates. 

Staff numbers across the group in 2019 increased by around 60 people to 15,813, and staff costs rose to £341.7m from £323m in the previous year. 

Pay to directors totalled £3.4m, with the pay of the highest-paid director more than doubling from £915,000 to £2m.

Shareholder funds totalled £147.9m. That amount included accumulated profits of almost £128.2m.