Company Report: Merchant Hotel Ltd.
The Merchant Hotel in Belfast is a significant part of the larger Beannchor Group. The full group has interests in hotels and a number of licensed premises across Northern Ireland. There are major inter-dependencies for the group in the financing of the Merchant Hotel and the other related businesses.
The Merchant has recently enjoyed modest but steady increases in turnover. The hotel business must be understood taking account not only of the improving business turnover, but also the impact of changes in property values where recent falls in value have impacted on the financing of the hotel and related businesses.
This presentation of the operating profit of the hotel omits specific impairment charges on the value of assets. In 2012, impairment of £11.7m was charged to the trading accounts; in 2013, impairment of £140,000 was included; and in 2014 impairment of £4.169m was charged.
Excluding the impairment charges, operating profits showed a big improvement in the latest reported financial year. The impairment charges are omitted in the presentation of operating profits. The charges have been included in the figures for the pre-tax results. The net losses feed into the post-tax position and reduce the final value of shareholders' funds in the balance sheet. In June 2014, the final shareholder value had become a negative figure.
The hotel and wider group have secured borrowed funds, reflected in bank borrowing of over £26m posted in the hotel accounts. Average employment rose in 2013-14 to 328 people from an average of 302 the previous year.
The financial results for parent company Beannchor No.1 reflect a positive operating profit when impairment charges are excluded. When the financial results of the other subsidiaries are added, the group results show an increase in turnover by over £5.5m to total just under £17m last year.