Higher occupancy and fees boost Four Seasons Q2 results

Higher year-on-year occupancy and rising fees helped boost Four Seasons turnover during the second quarter.

Four Seasons Health Care reported a 5.2% rise in fees to £628 in the quarter compared with £597 in the prior year period.

Average occupancy was also up by 2.8 percentage points, to 87.7% from 84.9% in the previous year. Occupancy for the operator has risen for the past four quarters.

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Four Seasons also managed to lower its payroll costs as a percentage of turnover by 0.8 percentage points on the previous quarter to 65.5% and by 2.3 percentage points year on year, despite the introduction of the National Living Wage in April 2016.

Turnover for the business was broadly flat year on year at £122.4 million.

The group’s upmarket brighterkind business reported a 0.6% percentage point rise in average occupancy to 86% with some earlier year impact from the end of winter bed contracts and refurbishing. Average weekly fees rose by 9.2% year on year to £875. Payroll as a percentage of turnover rose by 1.3 percentage points year on year due to increased spending.

Turnover for brighterkind rose to £22.4 million from £20.7 million in the prior year period.

Robbie Barr, chairman, said: “I am pleased to announce that we have continued the momentum of the business in 2016. Our quality performance and KPI have improved and  our embargo levels are at the lowest level for many years down to just three currently.”

Mr Barr said underlying drivers of the sector remained local authority care fees and increasing costs from the introduction of the National Living Wage, although this had been mitigated to some degree by the social care precept.

The chairman highlighted increased funding for nursing care from £112 to £156 per week and Brexit as “two key developments”.  Around 30% of residents of the business receive additional funding, equating to an estimated £6m rise in EBITDA.

Mr Barr said that the full effect of Brexit remained unclear but an expected fall in GDP would place additional pressures on government spending and leaving the EU left concern over the future of EU nationals within the business.

He added: “The long term capital structure of the business is not appropriate and we are holding ongoing discussions with key stakeholders.”

The chairman said a decision on future ownership structure would be made later in the year. Current net debt for the group stands at £527m (see Financial woes threaten Four Seasons future).

 

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