Yorkshire entrepreneur says growth hit by banking crisis

CARE homes operator Meridian Healthcare has reported record turnover and profits for a ninth year in a row, and expects continued growth this year.

But Yorkshire-born chairman Alan Firth, who runs the North West-based business with his wife Susan, Meridian’s managing director, says the company’s growth prospects are being hampered by the banking crisis.

“We are a successful, well-run business and there are a lot of opportunities out there, but the cost of borrowing is just not realistic. We are ambitious and keen to move forward so it is very frustrating to be in this position,” said Mr Firth, a Huddersfield Town fan whose Hyde-based firm has six sites in his native Yorkshire.

“We should do a 10th year of growth – we opened new facilities in Knowsley last year and have opened Leeds this, and both are now full. The question is though is whether  the banking situation will sort itself out so we can continue to grow the business beyond April 2010.

“A couple of years ago we were seen as being too risk averse because we didn’t want to borrow more than we needed, and now it’s difficult to even use our own cash because if we want to borrow more to do anything, the bank wants to re-price everything.”

Meridian currently banks with HBOS, which it owes £51m. The company has never breached any of its covenants, and is talking to several; other major lenders.
Meridian operates 1,338 beds at 27 care homes along the M62 corridor. It has invested around £20m in expanding its portfolio in the last four years on acquiring new sites or developing its own facilities.

The company is committed to the highest standards of care. In its latest centre in Leeds the rooms are en-suite and there is an Internet cafe, cinema and beauty salon for residents.

In the year to the end of March this year the company posted a profit of £3.6m on turnover of £28.5m. Last year it made £3.2m on turnover of £26.4m.

Mr Firth, who was recently named one of the North West’s top entrepreneurs by accountancy firm Ernst & Young, joined the company in 1993, three years after Tameside Council transferred its care homes into private ownership.

Although Meridian has received a number of takeover approaches from both the trade and private equity buyers, the Firths are adamant that they would rather continue to grow the business themselves than sell for a low price.

Mr Firth, pictured left, said: “We don’t want to stand still, we’re ambitious people so we’ll have to bite the bullet and refinance so we can grow. Whether it’s with our current bank is another matter.

“There are not many trade buyers out there – Four Seasons as we all know has got major problems with debt and Southern Cross has got some issues too.
“As far as private equity is concerned, they want to buy us on the cheap, and we’re not selling unless we get a fair price. We have spent years building this business.

“In the past people have thought this sector would be an easy money-spinner, but it’s not. First of all you are dealing with vulnerable elderly people, and they are the top priority, and it is a responsibility we hold dear.”

Meridian employs more than 1,200 people at its 27 care homes. The majority, 21, are based in the North West.