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Apex announces 25% pre-tax profit increase

EDINBURGH-based Apex Hotels has revealed that it hiked underlying profits by about 25% in its last financial year, as turnover was boosted by its new Temple Court property in London.

expansion: Owner Norman Springford wants to add another hotel to its London portfolio. Picture: Graham Hamilton
expansion: Owner Norman Springford wants to add another hotel to its London portfolio. Picture: Graham Hamilton

The four-star contemporary hotel chain, launched by accountant Norman Springford in 1996, said yesterday that it had made pre-tax profits of £7 million in the year to April 30, before exceptional items, up from £5.6m in the prior 12 months.

Managing director Angela Vickers flagged an appetite to open a further hotel in London, where Apex has three properties.

Apex, which is owned by Mr Springford and his family, also revealed it had generated £35m of cash from lease transactions for four of its hotels, two of them in Edinburgh, one in London, and one in Dundee. It said this cash had been used to repay bank borrowings.

The company added that, in October this year, it had arranged a new borrowing facility with existing banker Royal Bank of Scotland to consolidate loans.

The facility comprises senior term debt of £69m, with a further revolving credit facility of £10m. Apex declared that this would allow it to undertake planned capital investment in its existing portfolio.

Ms Vickers highlighted a sustained improvement in trading, in terms of occupancy and room rates, across Apex's hotel portfolio since the spring of this year.

Apex, which has eight hotels, meanwhile noted that trading in the second half of the year to April 30, 2013 had been stronger than in the opening six months of the financial period.

Commenting on trading in the current financial year to next April, Ms Vickers said: "It is much improved and it seems to be sustained, which is great. At the start, when it came back, we were a bit apprehensive about how sustainable it was going to be. It seems to be continuing."

She added: "We are actually strong across all cities, which is great, at the moment. Edinburgh has been particularly strong. It probably started picking up in April, May time. We are actually experiencing a great surge in Dundee."

Ms Vickers noted that business in Dundee was benefiting from a bit of "overspill" from the Aberdeen hotel market. She also highlighted a boost to trading from the closure of the Hilton in Dundee, to make way for the city's waterfront development, and a delay in the opening of the new Malmaison hotel in the city.

Apex's portfolio comprises the International, European, City, and Waterloo Place hotels in Edinburgh, the City Quay Hotel & Spa in Dundee, and the City of London, London Wall, and Temple Court properties in the UK capital.

The company said it had achieved turnover of £50.6m in the year to April 30, up by 21% on the prior 12 months. It noted its Temple Court hotel in London, opened in March 2012, had generated £10m of turnover in its first full financial year of trading.

Detailing the lease transactions, entered into either side of the April 30, 2013 financial year-end, Apex said: "Towards the end of the financial year, the Apex Waterloo and Apex City of London hotels entered into ground rent lease transactions. Post year-end, two further hotels, the Apex European and Apex City Quay, entered into similar long-term lease (arrangements). Cash generated from these financing transactions totalling £35 million has been used to repay bank borrowings.

"Under the terms of these lease agreements, the group retains the uninterrupted rights to operate these properties for the next 150 years, with the option to repurchase each of the properties at the end of the lease term for £1."

Ms Vickers said Apex had taken an exceptional charge of £2.7m in the year to April 30 in relation to the lease arrangements.

She expressed hopes of being able to secure a site for another Apex hotel in London, highlighting the possibilities of converting an office block or vacant property, or acquiring a hotel which was trading.

Ms Vickers noted some properties in London were changing hands for substantially more than two or three years ago, but added: "Hopefully, we have not missed the boat and we will be able to pick something up that is suitable for conversion."

Asked about the likely timescale for opening another London hotel, she replied: "If we were looking at an acquisition, we would normally have an 18-month timescale for conversion and build. We would be looking for another opening probably about two years down the line by the time we get through acquisition and planning etcetera."

Apex said it had sold 340,013 rooms in the year to April, up from 290,480 in the prior financial year, with occupancy up to 81.4%, from 80.4%, and average room rate rising to £115.45, from £108.79.

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