The accounts of the Mater Private are interesting for a variety of reasons. For a start, it employs 1,500 people and is the largest private healthcare operator in the state. The numbers also give a deep insight into the performance of the wider private healthcare market.

But, as a result of a major court action between the HSE and the Mater Private, some of the detail in the accounts have added resonance – particularly the hefty intercompany interest bills paid to a Luxembourg entity.

When InfraVia Capital Partners acquired the Mater Private hospital group from Harbourvest, a Capvest-managed fund, in 2018, it funded the deal through a mix of intercompany debt and bank loans. The intercompany debt was funnelled to Oval Topco, the holding company for the Mater Private, and came from the Luxembourg company.

Why does this matter? Well, to ramp up healthcare capacity following the arrival of Covid-19, the state had to effectively take control of Ireland’s €1.2 billion private hospital sector in early April. In return for covering the operating costs of the hospitals, the state had access to all their services.

However, the HSE was concerned about interest payments on intercompany loans that had been used to help InfraVia Capital Partners acquire the hospital in 2018. The hospital was claiming significant sums, arguing that interest on intercompany debt payments fell under the terms of the HSE contract. A court action is now ongoing over what needs to be paid.

Accounts just filed for Oval Topco show just how much is at stake. In 2019, the first full year of operating following the takeover, the Irish company paid finance costs to related group companies totalling €27 million. The figure is likely to be the same again in 2020, and this is what the HSE is attempting to not pay.  

At the end of 2019, the company owed €220 million to credit institutions. These included AIB, Bank of Ireland, Barclays, ING, BNP Paribas, Bawag PSK, and Intesa Sanpaolo. The interest bill on the bank debt was €4 million.

The scale of the intercompany interest bill – the issue at the heart of the group’s court action with the HSE – also had a dramatic impact on its finances for the 2019 financial year. The group had revenues of €256 million during the year and recorded an operating profit of €22.2 million during the year. However, this swung to a pre-tax loss of €30.3 million after writing down goodwill and also due to the cost of debt finance.

Accounts show that the total interest repayments – between both intercompany and also bank debt – came to €32.7 million. It also wrote down goodwill to the tune of €26.2 million, a financial restructuring that added to the annual loss.

At the end of the year, the company had retained losses of €342 million and owed related group companies €409 million. The group comprises hospitals in Dublin and Cork, an advanced cancer centre in Limerick, and a number of outpatient clinics in locations around Ireland.

BAM: “Inaccurate and misleading information” over hospital deal

Meanwhile, new filings reveal new information on the construction firm BAM and its ongoing involvement in developing the new National Children’s Hospital. BAM Building is currently suing the National Paediatric Hospital Development Board. The dispute follows a stalemate in the contract dispute resolution process between the state body tasked with delivering the National Children’s Hospital and its main contractor.

In a note accompanying its financial results, the company’s directors state that the “project continues to present a number of challenges to the company from both an operational and financial perspective, including those arising from the impact of the Covid-19 pandemic”.

The directors also point to the damage to reputation as a result of the controversies. “In addition, despite clarifications included in the NCH independent review published by PwC (April 2019), the inaccurate and misleading information resulting in negative publicity around the project is a concern given our otherwise high reputation in terms of quality and delivery as the largest public works contractor in the Republic of Ireland.”

Furthermore: “We have a strong order book at year end, notwithstanding this we must apply a conservative approach to 2021 and beyond due to the impact of the Covid-19 pandemic. Our industry remains in a fragile condition as the uncertainty surrounding Covid-19 coupled with the impact of Brexit on material supply are presenting new risks.”

In 2019, BAM had revenues of €589 million, up from a figure of €523 million of the year before. It made a pre-tax profit of €17.2 million, up from €13.8 million of the year before.

The company also provide some commentary on the impact of the pandemic: “The spread of Covid-19 has caused severe disruptions in many economies, including those impacting the company and its customers, which are facing into a recession of an undetermined extent and length. We expect that the most significant potential impact on our financial results and cashflows resulting from Covid-19 in 2021 would be in relation to supply chain, customer orders, and order fulfilment.”