Leading North East care, leisure and property business Malhotra Group plc has unveiled its annual results for the year ended 31 March 2022.
Whilst the results continue to be partially impacted by the Covid pandemic, it has revealed it is in a strong trading position and is continuing its planned and extensive expansion programme across all sectors of the business.
The Group’s turnover for the year ended 31 March 2022 was £41.3m (2021: £30.9m) reflecting a 34 per cent increase on the previous year.
The Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) result was £13.4m (2021: £9.1m), a 47 per cent increase on the previous year and the resultant operating profit increased by 38 per cent to £8.3m (2021: £6.0m).
The diverse nature of the group’s activities, combined with continued investment in the assets of the group has demonstrated the resilience of the group, enabling it to show an improved performance in a period where trading continued to be negatively impacted by the Covid pandemic.
Care Division
The impact of the Covid-19 pandemic was felt throughout the full financial year ended 31 March 2022 and has continued to have an enormous effect on the healthcare sector. Occupancy of the mature care homes was below the pre-pandemic levels during the year, but the business has shown great resilience and post year end occupancy numbers are approaching pre-pandemic levels.
During the year the group opened Bede House, a new purpose built 66-bedroom nursing home development at Ryhope, Sunderland, and started to fill Beech Tree House, the new 86 bedroom unit which opened in Alnwick the previous year. Work continues on the conversion of the former Rex Hotel at Whitley Bay, North Tyneside, into the 83-bedroom Bay View House care home, which is scheduled to open in 2024.
At the year end, three of the care homes are rated Outstanding by the Care Quality Commission (“CQC”) with all other homes rated as Good.
In terms of financial performance for the year end 31 March 2022, fee income increased to £30.6m (2021: £28.1m) and operating profit was £7.0m (2021: £7.9m).
Leisure Division
The leisure venues were not able to fully open at the beginning of the financial year due to pandemic restrictions. However, as venues were able to open as normal with the ending of pandemic restrictions, the company saw a strong recovery in demand across all of its sites. The new 64-bed, 4 star Great North Hotel experienced a very strong demand for bookings, something also seen at The Grey Street Hotel in Newcastle.
Trading across all sites also benefitted from welcome Government support initiatives for the leisure sector, including the “eat out to help out” scheme and the partial reduction in VAT.
The leisure division won numerous awards during the year including The Great North Hotel winning Construction Excellent NE Project of the Year 2021, The Guardian named The Grey Street Hotel as one of the top 10 city break hotels in the UK, and Leila Lily’s was named the best North East Pub and Bar of the year in the National Pub and Bar Awards.
Besides its current operational leisure assets, work continues on the development of a number of new projects including a major redevelopment of property on Grey Street, Cloth Market and Mosley Street which will be combined into a single scheme, the redevelopment of the Sandpiper at Cullercoats into a mixed commercial and residential scheme, and on Pilgrim Street creating a 25-apartment aparthotel and the development of three drinking establishments and a rooftop restaurant.
During the year the company refinanced its leisure operations with a new £18.5m facility from HSBC which allowed it to repay a series of existing lenders. This has allowed the group to reorganise its leisure operations and these are now all carried out in Malhotra Leisure Limited.
In terms of financial performance, turnover increased to £8.8m (2021: £1.0m) and EBITDA increased to £1.8m (2021: loss of £0.8m).
Property Division
The Group is the eighth largest property owner in the North East with a 1.1 per cent market share and 68th nationally with a 0.3 per cent market share*. Its Net Internal Area is 658,395sq ft.
Turnover increased to £2.0m (2021: £1.8m) and operating profit for the year was £1.3m (2021: £0.1m).
Following the publication of the Malhotra Group plc annual results its CEO, Bunty Malhotra, said we are “extremely proud” of its performance and that of our colleagues during the year.
“Two of the sectors in which we operate were hardest by the pandemic and subsequent lockdowns; care and hospitality,” he said.
“Our performance in the year when Covid restrictions were ended but continued to impact our business is down to several factors; our highly experienced management team, the diversity of our assets, and our continued investment in quality across all of our business segments.”
He added: “We would like to thank all our staff for their magnificent contribution during the year.
“Our care staff have continued to be outstanding and worked relentlessly during the last year so that our residents could be provided with high-quality care. We would like to offer our heartfelt thanks for their enormous efforts and dedication.
Commenting on the year ahead, Mr Malhotra said “Looking forward into our next financial year we recognise there are significant challenges for us to navigate, namely; the cost of living crisis, high energy costs, increased interest rates, high inflation and a lack of supply of staff in the care sector.
We welcome the support the Government has recently announced with regard to energy prices, both for businesses and individual households, which will partially help to alleviate some of the challenges currently in the UK economy, and the reversal of the NIC increase and keeping corporation tax at 19%. The headwinds we are facing will undoubtedly impact on our profitability for next year, but our resilience, strong balance sheet and ability to generate cash across our group mean we are able to navigate these challenges but are not immune to them.”