Company Information

Four Seasons Health Care (“Four Seasons”) operates 445 care homes and 61 hospitals and specialist units in the UK, Isle of Man and Jersey. It employs 30,000 staff caring for about 20,000 residents.

The Group is trading profitably with earnings in 2011 [before interest, tax, depreciation and amortisation] consistent at circa £100 million and slightly up on 2010.

During 2011 Four Seasons increased its bed capacity by 40% by acquiring the business of Care Principles and taking over homes from the failed Southern Cross Healthcare. These acquisitions were completed without the need for additional financing.

The combined former Care Principles and Southern Cross portfolios are expected to deliver incremental earnings of circa £15 million during 2012.

Occupancy has continued to increase against the sector trend at circa 88%-89%.

The most recent valuation of the Group’s property was circa £941 million (see note 3).

Four Seasons maintains a balance of freehold and leasehold properties, owning circa 60% of the facilities it operates so it is not over-exposed to rental costs. It also has the protection of flexible rent cover negotiated with a number of landlords in the event of difficult trading conditions.

Four Seasons committed capital expenditure of £7 million in the final months of 2011 on homes it acquired from Southern Cross, with a further expenditure of c£22 million due to be spent this year across the Group’s portfolio [c£900 per bed - believed to be about 40% higher than the sector average].

Four Seasons’ strategic focus is to grow the business sustainably, with occupancy being supported by sector leading quality of care and innovation in developing services that anticipate and meet changing market needs. The recent acquisitions are in line with that strategy.

On the most recent inspection ratings c.88% of Four Seasons’ homes in England were rated good or excellent making it one of the highest rated providers. Four Seasons’ diversification strategy has given the company a sector lead in the development of specialist services for care home residents with higher dependency needs, for which there are fewer readily available substitutes, such as care at home.

The acquisition of the former Care Principles business and the former Southern Cross homes represented a good fit with the Group’s existing portfolio. The services offered by the former Care Principles in diagnosis and treatment of people with specialist mental health needs orlearning disabilities are complementary to those of Four Seasons’ specialist care subsidiary, The Huntercombe Group, which provides treatment in areas of mental health, acquired brain injury, neurodisabilities, learning disabilities and special needs. The Huntercombe Group has become,in its own right, the third largest independent specialist care provider in the UK.

The 140 former Southern Cross homes and specialist units that Four Seasons has taken over have increased regional cover as well as capacity.The portfolio of former Southern Cross homes is being turned around and is making a positive contribution with occupancy increasing.

Four Seasons successfully completed a capital restructuring of its debt in 2009 in which certain of its lenders – banks and other financial institutions - exchanged debts of circa £780 million owed to them for a stake in the business. This effectively reduced the debt by about half. Then in 2010 the maturity date of the remainingdebt was extended to September 2012. This has been a planned phased process announced in 2009.The Group is well able to manage its current level of debt and is confident of arranging a refinancing.

The directors of Four Seasons and their financial advisers have been considering, together with shareholders and certain of the Group’s lenders, a number of possible capital structures to ensure that appropriate levels of funds will be in place after September 2012 to match the Group’s financing objectives. These include debt refinancing, new equity from existing shareholders, as well as potential funding from new investors or combinations of these options. As part of this processFour Seasons is exploring equity raising opportunities alongside a debt refinancing. The company and its financial advisers are in contact with external parties who have expressed an interest in making an investment.

We have shared financial information with the Department of Health and the Association of Directors of Adult Social Services, who have acknowledged our transparency in helping to provide assurances of our viability. We have also provided summary financial highlights to care commissioners and we are publishing our accounts on this website. Financial and operating highlights for the year ended 31 December 2010 are given on our financial performance page - to view the Directors’ report and consolidated financial statements for FSHC (Guernsey) Holdings Limited for year ended 31 December 2010, please click here.