Queens Moat Houses, the hugely-indebted hotel group, continues to struggle towards recovery, returning to the black last year for the first time since 1990. But Stanley Metcalfe, chairman, presented a decidedly cautious view of the future as he announced the results yesterday.
"At this early stage in the current year, I can report that trading has been satisfactory," he said. Economic growth was a major factor in the company's revenue growth, and while he was "cautiously optimistic about the trading environment for the UK in 1996," prospects for growth in Germany and France were not good, particularly against a background of intense competition.
Pre-tax profits of pounds 42.4m in the year to December replaced a deficit of pounds 95.2m last time, but the group still faces a mountain of debt and would have been in loss but for pounds 48.8m of interest waived under last year's pounds 1.3bn capital restructuring. Borrowings stood at pounds 1.02bn at the end of December, down from pounds 1.28bn the previous year.
The group made another small inroad into that yesterday when it was announced that Stakis, the Scottish hotels and casinos group had paid pounds 3.4m for the Europa, near Newcastle-upon-Tyne. The hotel, to be known as the Stakis Tyneside in future, brings to three the number of Queens Moat's County hotels sold since the beginning of the year, following the disposal of eight in 1995.
These country-house hotels are deemed not to fit into the group's core Moat House brand, situated on main arterial routes within or on the edge of towns, and a further 27 have been earmarked for sale in the future.
The news left the shares unchanged at 22p yesterday - although they have soared since being re-listed at 3p last May after being suspended for more than two years.
Mr Metcalfe said that the further improvement in the group's trading performance anticipated at the half year results in September was evident in the full year figures. Operating profits rose from pounds 35.2m to pounds 44.7m. After adjusting for the effects of the restructuring - principally higher operating rentals - the underlying increase was 54 per cent.
Andrew Coppel, chief executive, said trading conditions had continued to improve in the UK, although there was stronger activity in the south of England than in the north.
Occupancy rates improved 4.7 percentage points to 66.8 per cent, still some way short of the market average of 71 or 72 per cent, but average room rates grew pounds 1.29 to pounds 42.29. That meant the rise in the yield -occupancy multiplied by average room rate - was ahead of the market, Mr Coppel said. In the Moat House division, yields were nearly 12 per cent up, but still below market levels.
The figures were boosted by a pounds 25.1m profit on asset sales and pounds 3.4m taken to the profit and loss account from the revaluation of the group's hotels.
This review, which was carried out by Jones Lang Wootton, showed the properties had fallen to pounds 891m at the year end, but stripping out disposals made in 1994, the portfolio increased from pounds 838m.