Macdonald group reduces debt by £100m

Macdonald Hotels, the UK’s largest independent hotel group, has announced it has increased profits and turnover in the last financial year, and reduced debt by almost £100 million.

The group, which has 55 hotels and resorts in the UK, Ireland, Spain and Portugal, published its annual results for the year to 2 April 2015 which showed:

• Group turnover up 7% (£10.2m) to £155.7m
• Total operating profit up 11% (£1.6m) to £16.9m
• Profit after tax up £2.5m to £6.1m
• Bank debt effectively reduced by over £96m at December 2015

The firm said major events such as the Ryder Cup, the Commonwealth Games, the Open Golf Championship and the Farnborough Air Show had provided a boost. Like-for-like hotel sales were up by 7% and operating profit rose 10%.

Ruaridh Macdonald, deputy chief executive, said: “Ensuring that our estate is continually refreshed is essential and during the year we invested a further £16m in capital projects, including refurbishing 261 bedrooms at our Macdonald Aviemore Resort, a new £1.8m leisure club and spa at the Macdonald Craxton Wood Hotel, Chester, as well as major bedroom refurbishment programmes at the Macdonald Holyrood Hotel, Edinburgh, the Macdonald Randolph Hotel, Oxford and the Macdonald Bath Spa Hotel, Bath.”

Gordon Fraser, deputy chairman and group finance director, said: “Profit before interest of £17.4m was £2.2m (15%) above last year, however higher interest charges due to the accounting treatment of the Randolph finance lease (£2.3m) and a 1% increase in our interest margin (£1.2m) resulted in a profit before tax of £2.7m, £928k below last year.

“A deferred tax credit of £3.3m has been recognised this year due to the forecast profits for the year ended March 2016 arising from the £58.8m gain from the disposal of land at Botley Park.  In total, profit after tax of £6.1m is £2.5m above last year.”

Commenting on current trading, Ruaridh Macdonald said: “We are continuing to perform strongly in the current year, building on the growth in 2014/15 with like-for-like sales and profits up by 6% and 7% respectively.

“There has been continued growth from both the commercial and leisure segments, with occupancy up a further 3 percentage points and average room rates up by 5%. It is particularly encouraging that, on both these measures, we are outstripping the industry comparatives by 2% as reported by Hotstats Hospitality Intelligence.”

The group has continued its capital investment programme, with £9m already invested and a further £5m committed in capital projects in the current financial year, with continuing major bedroom refurbishment programmes at the Randolph Hotel, Oxford, the Bath Spa Hotel, Bath as well as at the Bear Hotel at Woodstock.

Over the last two years the firm has also invested over £1m in hotel IT infrastructure and in its website.

Macdonald’s debt is now reduced to a core facility of £193.6m plus £2.5m revolving credit, a substantial reduction compared with its position in March this year, where total bank borrowings were £301m.  Following the group’s privatisation in 2003 gross debt was over £700m.

Among its assets, Macdonald has significant non-hotel assets and says it has received a number of offers totalling over £30m for development land.

In a statement it said: “We are currently assessing how best to maximise value from our land bank throughout the estate with a view to further reducing our debt and accelerating the reinvestment in our hotels over and above our existing capital expenditure facility.”