Barchester Healthcare, the UK nursing and residential care facility giant backed by tycoons JP McManus, John Magnier and Dermot Desmond, saw profits drop last year.
Despite this, the company believes it is set for a strong growth period due to the demographics of the UK population. Like most European societies the UK will have to deal with a large elderly population within the next two decades, according to experts.
According to the company's accounts for 2008, Barchester made a profit of £7.5m (€8.3m), down from £8.8m (€9.77m) the previous year.
The fall in profits came despite a bumper year for Barchester, with revenues jumping by more than £31m to £381.6m.
The increase in revenue was offset somewhat by the rising cost of sales – up £27m (€29.97m) to £330.1m (€366.5m) over the year – and a half-million hike in administrative expenses.
Barchester Healthcare is the UK's fourth-largest care-home provider, with more than 11,000 registered beds across a portfolio of 174 homes spread throughout the country.
A significant number of those beds are taken up by private-pay residents.
In their report, the directors did not recommend the payment of a dividend. Following the restructuring of the business into two companies in 2007, shareholders were granted a windfall dividend of €521m – the massive payout came just one year after Barchester turned a million-euro loss into a
€552m profit in the space of a year.
The directors identify fluctuating interest rates and breaches in loan covenants as a key risk given the group's level of gearing following refinancing. However, the group had hedged 56% of its borrowings by year end and there have been no instances of breaches during the current year, with none forecast in the future, they said.