Board Hails Landmark £500m Debt Reduction
Macdonald Hotels, the UK's largest independent hotel group,
achieved a profit of £55m in the last financial year and announced
it had now reduced its bank debts by over half a billion pounds
The profits, which follow the sale of land at the Macdonald Botley
Park, Southampton, are supported by a continued strong trading
The group, which has 55 hotels and resorts in the UK, Ireland,
Spain and Portugal, published its annual results for the year to 31
March 2016 which showed:
- Group turnover up 5% to £163.4m
- Total operating profit up 5% to £17.7m
- Profit after tax up £49.1m to £55.2m
- Bank core debt reduced to £196m
Announcing the increase in profits and the continuing debt
reduction, Gordon Fraser, deputy chairman and managing director
said: "We're in the best shape ever and are quietly excited about
the opportunities for further growth in the next few years.
"It's been a tremendous combined effort by the workforce and the
management team to put in such a strong, sustained performance
while at the same time reducing our debts by half a billion pounds
in just 13 years. I can't think of many businesses in our sector
which could have done that, but it's testament to the drive and
hard work of all our people. They should be enormously proud of
what they have achieved."
Mr Fraser revealed like-for-like hotel sales up by 5% and hotel
operating profit up by 3% on a strong year last year which was
supported by a number of large events. Increases across commercial,
golf, spa and leisure segments have resulted in a 1.5% growth in
occupancy and a 2.4% increase in average room rate.
During the year the group invested a further £13m in its
properties, including refurbishing 128 bedrooms at the Macdonald Randolph Hotel in
Oxford, the completion of a major refurbishment of the Macdonald Aviemore Highland Resort
including 172 bedrooms, public areas and restaurants as well as a
major bedroom refurbishment programme at the Macdonald Bath Spa Hotel,
Profit before interest of £74.9m was £57.5m above last year. In
July 2015 the group completed the sale of land at Botley Park Golf
Course to three developers, being the main contributor to the gain
on sale of assets of £57.2m. The staged payments will further
significantly reduce debts.
Commenting on current trading, Gordon Fraser said: "Growth in the
commercial and conference segments has supported 5% increases in
both like-for-like sales and profits.
Although the group has had to restrict its capital investment
programme this year, following the repayment of bank debt from cash
flow of £18m, we have already invested £4m and have committed a
further £3m in capital projects in the current financial
"We are in the process of completing the bedroom refurbishment at
the Macdonald Holyrood and we are
completely remodelling the Macdonald Houstoun
House and Macdonald Forest
Hills, with the aim of achieving '4 Red Star' rankings at each.
We have also invested £0.5m in an online self-serve HR system which
is a significant part of our overall people strategy."
Commenting on the banking facilities, Mr Fraser said: "Following
the sales of the Macdonald Old England, Macdonald Marine and
Macdonald Swan's Nest hotels, we have we have now repaid in full
our B Facility. The settlement of our C Facility from the proceeds
of the sale of the land at Botley Park leaves only our core A
Facility of £193.6m plus £2.5m revolving credit, compared with a
gross debt position of over £700m in 2003."
The group's significant non-hotel assets will also play a major
role in strengthening its finances, revealed Mr Fraser: "We've
agreed heads of terms for joint ventures worth more than £50m with
a further £40m to follow, which will enable continued investment in
our properties, our people and further debt reduction.
"Like other hotel operators, we envisage significant benefits from
the Brexit vote, with the weaker pound making the Britain an
extremely attractive place for overseas visitors and encouraging
more UK holidaymakers to opt for 'staycations'."
A tax charge of £6.9m has been recognised this year due to the
profits arising from disposals. In total, profit after tax of
£55.2m is £49.1m above last year.