Carehome group’s woes continue

CHESHIRE-based care homes group Four seasons has reported a 39% fall in annual earnings to £38.7m.

The debt-ridden company’s private equity owner has now begun talks with its lenders to safeguard its future.

Four Seasons, the UK’s biggest care homes provider housing 20,000 elderly people across 450 homes, has been hit by a fall in local authority fees and rising costs in addition to the introduction of the national living wage.

The company is also struggling with £525m of debt, with annual interest payments of more than £50m.

It owned by City financier Guy Hand’s private equity vehicle Terra Firma. Options open to the company include a sale or a debt-for-equity swap with lenders, with analysts preferring the latter solution.

The group said is continuing to dispose of properties which are underperforming or not core to its business strategy.

During 2015 it sold 18 freehold properties, a development site and a portfolio of investment properties (homes that the group owned as landlord but did not operate) realising £44m. 

In addition, six properties have been sold in 2016 realising £4.3m. 

Meanwhile, developments are continuing at two sites, a 28 bed new build hospital at its Frenchay Brain Injury Rehabilitation Unit and an extension to a home in Jersey, while a refurbishment programme was progressing for brighterkind homes with some 23 projects either completed or being executed.

Four Seasons chairman Robbie Barr said: “The group has adequate financial resources and liquidity for the medium term. I recognise that the group’s capital structure is not suitable for the long-term needs of the business. Options are now being explored.

“In a market environment that is extremely challenging because of the under-funding of social care, the group’s financial performance remains below the levels of recent years, but operational improvements have begun to benefit our customer satisfaction, occupancy levels and financial results and we see encouraging signs that this positive momentum will continue into 2016.”

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