Andrew Coppel, QMH's chief executive, said he remained confident of winning the High Court case against John Bairstow, former chairman of the group, and three other ex-directors who are claiming wrongful dismissal. He said most of the legal costs were now behind the group.
The legal action harks back to the early 1990s when QMH almost collapsed under a mountain of debt as the hotel market plunged into recession and the value of its properties was slashed. The rise in litigation costs caused QMH's expenses to rise 50 per cent to pounds 9.4m.
Even so QMH unveiled a rise in underlying pre-tax profits of pounds 19.6m (pounds 4.6m) thanks to a strong recovery in the UK hotel market.
QMH is considering selling its 11 hotels in France and Belgium with a book value of around pounds 40m in an effort to reduce debts and concentrate resources on other European markets. It has also put for-sale sign over four hotels in Germany and one in Switzerland as it completes the shake- up of its portfolio.
The group reduced its debt mountain from pounds 933m to pounds 810m during the year, but is no nearer to arranging a debt-for-equity swap with its bankers.