CARE UK CLEARLY INDICATE THAT SELLING THEIR CARE HOMES FOR THE WORKING CLASS IS BEING NEGOTIATED. TERRA FIRMA, THE PRIVATE EQUITY INVESTORS MANAGING FOUR SEASON CARE HOMES, HAVE SIMILAR PLANS.
THESE CARE HOMES ARE NOT FINANCIALLY ATTRACTIVE INVESTMENTS.
COMPANIES IDENTIFY THAT THE MOST PROFIT IS TO BE MADE IN PURPOSE BUILT 70 BEDDED + UNITS THAT ARE PRIVATELY FUNDED, WITH TYPICAL FEES BEING £900 + PER WEEK.
AS UK LAW STANDS, ANY COMPANY CAN TERMINATE A RESIDENTS STAY IF THEIR PRIVATE FUNDING RUNS OUT, EVEN IF THE LOCAL COUNCIL AGREE TO COMMENCE TO FUND THEM, UNDER THE PRINCIPLE OF THE ‘ECONOMIC RIGHTS’ OF THE COMPANY.
COMPANIES CAN REFUSE TO ACCEPT NEW RESIDENTS WHO ARE NOT PRIVATELY FUNDED.
MANY COMPANIES INVOLVED IN LARGE SCALE CARE HOME PROVISION ARE HEAVILY IN BEBT. THEY CHARGE A HEFTY MANAGEMENT FEE TO RUN THE COMPANY, WHICH, IN EFFECT, IS OWNED BY THEIR CREDITORS.
THERE IS TOTAL SILENCE ABOUT WHAT IS TO HAPPEN WHEN, NOT IF, DEBT-RIDDEN, AND FINANCIALLY-DRIVEN CARE HOME COMPANIES PULL OUT OF THE WORKING CLASS CARE HOME SECTOR.
WHO BUYS THE FINANCIALLY UNNATRACTIVE CARE HOMES IN WORKING CLASS AREAS?
HOW CAN ANY OTHER COMPANY MAKE A PROFIT, WHEN LARGE CONCERNS, SUCH AS CARE UK AND TERRA FIRMA, HAVE ALREADY CUT OPERATING COSTS TO THE BONE, REDUCING THE AMOUNT OF STAFF, OR EMPLOYING CHEAPER OVERSEAS STAFF?
THEY DID NOT TELL YOU THIS BEFORE THE GENERAL ELECTION.
THEY KEEP QUIET ABOUT IT NOW.
CARE IS GOING ‘UNDERGROUND’. THERE IS A GROWING BLACK MARKET IN ‘UNOFFICIAL’ CARE, WITH DESPERATE CHILDREN OF THE ELDERLY AND PARENTS OF CHILDREN IN NEED ‘EMPLOYING’ THE CHEAPEST ALTERNATIVE TO STATE FUNDED CARE.
ENTER THE TWILIGHT ZONE OF CARE FOR THE WORKING CLASS.
WALK BLINDLY INTO VICTORIAL VALUES BRITAIN.
CARE UK FINANCIAL REPORT [for the three months ended 31 March 2015]
As previously announced, during May 2015 Care UK entered agreements to sell its Mental Health and Learning Disability businesses and is at an advanced stage of negotiation for the sale of its Care at Home business. This is part of a strategic review programme aimed at refocusing Care UK’s portfolio of services on the continued development of residential care services and on its market leading primary and secondary NHS health care services.
In Residential Care, Care UK has made good progress with the opening of new care homes and has generally maintained performance within a context of sector wide challenges from more rigorous quality regulation and related labour management pressures.
Within Health Care, Care UK has agreed a number of contract extensions reflective of the pre-election environment and is encouraged that post election it will be able to more actively support the NHS as it responds strategically and urgently to its demand and financial pressures
Management continue to believe that Care UK is well placed to develop its services across the health and social care sectors, reflecting rising demand and the imperative for national and local government, service commissioners and providers, to improve performance and efficiency through best practice and service innovation.
Revenue for the quarter increased by 4.6 per cent. to £187.8 million, reflecting new care home openings and maturity progression, together with growth in elective surgery volumes.
Reported net debt at 31 March 2015 was £382.7 million, a reduction of £11.2 million from the peak reported in Q1. The reported leverage ratio was 7.35x with pro-forma1 financial leverage at 6.83x, in line with management expectations
Enterprise value proceeds [net of fees and other expenses] above £120 million are expected from the divestment programme with all three businesses now shown as Discontinued Operations in this report. The principal intention is to utilise the net disposal proceeds to reduce net debt
Residential Care Services: The growth trend continues in Residential Care Services with revenue in the quarter increasing 10.2 per cent. compared to the prior year, primarily as a result of private pay occupancy increases in new homes.
Adjusted EBITDA for the quarter of £4.4 million is in line with prior year, with profitability in the mature estate benefiting from improved labour cost management, offset by the expected reduced contribution from the Suffolk homes as old homes transition to new.
Labour costs as a percentage of revenue were 59.4 per cent. for the quarter, 2.5 per cent. lower than the prior year. Inevitably, labour cost management will continue to be a major focus due to a complex mix of economic, demographic and regulatory factors affecting the sector exacerbated by the national shortage of nurses and competition for care workers.
The complex Suffolk contract build programme continued to make progress in the quarter, with two homes opening with a combined bed total of 140. A further 70 bed home opened in April resulting in eight of the planned ten new homes now being operational.
Occupancy across the portfolio has been maintained at 85.4 per cent. in the quarter, despite the consequences of higher UK levels of mortality being experienced across the winter period. Occupancy progression in new care homes has also been slightly slower than anticipated.
The recently changed regulatory environment remains challenging with several homes not performing to potential and four homes currently assessed as ‘Inadequate’ by CQC using new inspection ratings. Improvement plans are well underway in all four homes with recognition by CQC that the plans are being implemented effectively. Management is highly focused on optimising performance at all homes, which would generate material trading upside.
Overall, the three discontinued service lines performed in line with management expectations. Continued strong occupancy within the residential Learning Disability business was offset by slower occupancy growth in the new Mental Health recovery units and a challenging Care at Home market.
Contracts have been exchanged for the sale of the Mental Health business [previously part of the Health Care division] to Partnerships in Care. Contract completion is expected on 1 June 2015.
The Learning Disability business [previously part of the Community Services division] was sold to The Lifeways Group on 13 May 2015. The potential sale of the Care at Home business [also part of the Community Services division] is at an advanced stage.
Six months ended 31 March
Revenue 374.7 [million]
Administrative expenses 63.2
Operating loss before financing expenses (25.0)
Loss before taxation 39.1
Net debt position as at 31 March 2014 and 31 March 2015.
Senior Secured Notes1 325
Revolving Credit Facility and bank loans 63.5
Cash and cash equivalents [43.6] [30.2]
lenin nightingale 2015