Hospitality company Cairn Group is investing across its portfolio once more after slashing losses caused by pandemic lockdowns by 70%.
Based in Newcastle, the group owns and runs 32 hotels and a string of bars and restaurants across the North East and beyond, including Cairn Hotel in Edinburgh, Newcastle’s Royal Station Hotel, Redworth Hall and Spa near Newton Aycliffe, and the Hilton Doubletree near Newcastle Airport.
For a second year running, accounts show the family-run firm’s finances took a hit from lockdown closures, with turnover dropping from £91.2m in 2020 to £34.1m for the year ended April 30 2021.
However, the prior year’s pre-tax loss of £31.8m was reduced to £12.28m, and its operating loss was cut from £26.1m to £7.5m, as the firm took advantage of support and bounced back following the easing of restrictions within the hospitality trade.
The leisure property owner and developer – which also runs Sohe, Spy Bar and Jalou bars in Newcastle – said the portfolio of hotels and their geographical spread has helped to reduce trading risks, but warned that “challenges and uncertainties continue to exist”.
It also warned that the full impact of Brexit is difficult to assess with the residual impacts of Covid-19 and significant price increases in gas and electricity, and that the directors expect market conditions to remain uncertain and that “this could be the case for a number of years”.
During the year it took advantage of Government support in the form of £12.37m in furlough payments, as well as £1.282m in other Corovirus related grant income.
The average number of employees was reduced in the year, from 1,484 to 1,354.
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In the accounts, director Aran Handa said: “The results for the year have been impacted by the Covid-19 pandemic and Government restrictions implemented to control the virus. Given this, overall, the directors are satisfied with the results for the year and acknowledge the challenges faced during the pandemic for the leisure and hospitality sector. The directors would like to take this opportunity to thank all the employees of the group once again for their dedication and hard work in these most challenging of times.”
The group said it has been careful with cash resources and holds £14m in cash, with a £3m overdraft also available on demand.
Looking forward, the group said trading has vastly improved, particularly following the gradual easing of restrictions from May 2021, and that previously-paused investment programmes across its estate have now resumed.
Mr Handa said in his report: “Trading outperformed pre-pandemic levels during the summer of 2021, principally due to the advantageous impacts of “Staycation” business following the relaxation of many leisure and hospitality restrictions within the 海角视频. After April 30 2021 the group began to see the positive impacts on trading of its pre-pandemic large-scale investment programmes, particularly in some of its flagship properties, therefore the directors have cautiously reinstated the group’s policy of investing in its estate in order to achieve its primary objective of maximising shareholder and stakeholder value.
“This investment is in the form of property investment; replacing the vehicle fleet with electric vehicles and plug-in hybrid electric vehicles, renovation programmes at various properties, enhancement to the “in-house” sales and marketing team, and further development of leadership and management skills at all levels of the business.”
Following publication of the accounts, Richard Warren, CFO at Cairn Group said: “The filed accounts are now over a year old, and while looking back that far is interesting – after all that we’ve all been through – we have to focus on the future. We’re well set up for the coming period to ensure we can continue to do everything we can for our customers and our staff.
“Significant bank debt has been repaid and even more will be repaid in the coming months. The business has more cash reserves than it’s ever had, and forecasted turnover is higher than we’ve ever achieved. We are managing the cost inflation in the market, and all profits will be re-invested. We’ve invested in a full fleet of EV cars and are looking to reduce utility usage as much as possible. The capital programme has been re-ignited with some significant projects already completed and some even more ambitious plans in the pipeline for the next 12 months.
“We’re positive, cautious, and sensible. Truth be told, given what we’ve all been through, the reported results for April 2021 are incredible, and the future is very exciting. “