Four Seasons capital structure is not appropriate, its chairman admits

Four Seasons 2015 Annual Report cover

Four Seasons Health Care has admitted that its current capital structure is not appropriate for the needs of its business.

In a conference call following the publishing of its 2015 financial results, the company’s new chairman Robbie Barr said that it will be meeting with bondholders to discuss new ways structure its debts following a year in which rising payroll costs hit profits.

Full year results for Ellie Investments, the parent company of Four Seasons Health Care, showed earnings before interest, tax, debt and amortisation fell from £64.1 million in 2014 to £38.7 million last year.

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The company still has net debt of £510 million, which is costing around £50 million per year in interest payments.

Credit rating agency Moody’s has assigned junk status to the company’s bonds, but Mr Barr reassured investors that it has the money to trade. “Whatever the outcome, the group continues to have medium-term finances for its needs and we don’t envisage this process having any effect on the day-to-day care provision in our homes, hospitals, and specialist care centres,” he said.

Four Seasons has seen an uptick in the first quarter of 2016, with a drop of 85% in embargoed care homes contributing to rising occupancy, higher average weekly fees and falling payroll costs as a percentage of turnover.

Its balance sheet should continue to improve this year as it continues to sell underperforming properties. Last year, it sold 18 sites for £44 million. Six more have already been sold since the start of the year, raising £4.3 million.

Tags : Elli InvestmentsFinancial ResultsFour Seasons Health CareTerra Firma

The author Rob Corder

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