Irish billionaires-backed Barchester’s profits soar

Barchester Healthcare, the UK care homes backed by Irish billionaires John Magnier, Dermot Desmond and JP McManus, saw its profits rise last year even as rent paid to a company owned by the controlling investors rose more than 4 per cent to £119.9 million (€143 million).
Operating profit at the group, one of the UK’s largest nursing home operators with more than 14,540 beds across 200 nursing homes and six hospitals, increased to £75.6 million from £64.2 million. Revenues jumped 13.6 per cent to £871 million.
The rent was paid on operating property leases with a company called Limecay Limited, which is owned by “common controlling shareholders” of Barchester’s ultimate parent, Jersey-based Grove Limited. Grove Limited is backed by Mr Magnier, Mr Desmond and Mr McManus, who have board representatives, along with several other investors.
Separate accounts for Limecay show that the value of its properties declined by £26.8 million last year to £1.86 billion, amid higher interest rates. Limecay owed £1.43 billion to creditors at the end of December, including more than £1 billion in bonds issued by it in the Cayman Islands more than a decade ago.
Barchester, which had an average of 16,250 staff last year, and the related properties came close to being sold five years ago to Macquarie for £2.5 billion, before the Australian financial services giant pulled out of the deal, blaming uncertainty caused by Brexit.
The Irish tycoons first invested in Barchester 25 years ago, a little over a year after the business was set up by British entrepreneur Mike Parsons.
The company sold its only Irish facility, the Knightsbridge Care Village in Trim, Co Meath, to French-owned nursing home group CareChoice in 2017 for an estimated €20 million.
Barchester said in its latest set of accounts that enquiries for places in its care homes and hospitals “remained strong and translated into occupancy levels that were consistently higher in 2023 and in 2022″.
The group said that its commitment to pay staff above the UK national living wage saw its costs increase last year. Still, it managed to reduce its reliance on agency staff during the period.
Barchester said that its ongoing investment in a digital transformation programme should ultimately improve care quality and profitability.
“Notwithstanding these cost pressures, with our consistent focus on quality care delivery, the private pay market and strong balance sheet, we are confident in the group’s continued further success,” said chairman John Coleman in the report.
“This includes the continuation of investment in the maintenance and enhancement of our existing estate as well as growing the business further through the opening of new, purpose-built premium care facilities.”
The board did not recommend the payment of a dividend last year, “as surplus cash is being invested in the maintenance and enhancement of the property portfolio to help maintain the condition of the homes for the enjoyment of our residents”, it said.
Barchester’s UK profits are subject to the local standard 25 per cent tax rate. However, the company expects to pay a top-up tax in future in Jersey under an international agreement shepherded by the Organisation for Economic Co-operation and Development to introduce a minimum 15 per cent rate on profits of large companies.
The standard corporation tax rate in Jersey is zero. However, draft legislation is going through the Jersey parliament to allow for the 15 per cent rate to apply to businesses with a global turnover of more than €750 million from 2025.
Barchester disclosed that it generated £2.9 million of pretax profits in Jersey last year.