THE Sefton Group has come out with fighting talk as it faces up to debts totalling £47m.
Chief executive Brett Martin says the island group is a ‘national asset’ and the next six to nine months are going to be ‘pivotal’ for the organisation’s future.
He says the group is determined to continue putting the spotlight on its ‘core’ activities of hotel and leisure as it cuts away at the ‘fat’ and ‘excess baggage’ that the group had accumulated.
Around 600 shareholders have been receiving copies of the group’s annual report ahead of the annual meeting at the Best Western Palace Hotel and Casino on Wednesday, September 19.
Manxman and father-of-three Mr Martin, aged 52, said: ‘I think the largest shareholders are in support of what we are doing.’
The annual report reveals the group’s overall debt has fallen from a high of £87m in early 2010 to £47m now. Chairman Sir Miles Walker says in the report: ‘Our aim is to reduce this figure further over the next 12 months with a target of less than £30m by mid-2013.’
The report points out that:
The group’s financial performance for the year has been affected by losses on the disposal of properties and a further write down in the value of investments.
Overall group losses for 2011 totalled £6.30 million (£7.76 million in 2010) with interest rate swaps, discontinued operations and capital disposals and provisions accounting for £6.6 million of net cost, turning a modest operating profit into the reported loss.
Sir Miles says: ‘Although disappointing, the loss-making provisions sustained were an unavoidable consequence of the group’s need to retrench into core activities by divesting itself of assets, such as the investment properties, for which long term bank funding is no longer available.’
Sir Miles said the largest single factor affecting the 2011 results was the cost of carrying the group’s interest-rate swaps, with a total charge to the profit and loss account of £4.22 million of which £1.83 million constituted the cash cost of servicing the swaps and £2.39 million the increased liability arising in the year through a weakening of future interest rate expectations.
Sir Miles said the good news was that an agreement had been reached with the swaps provider, Lloyds Banking Group, to capitalise the swaps liability. This has ‘crystalised’ the balance sheet and eliminated the annual cash cost of the swaps.
‘It will take some time for the full impact of the negotiated benefit to become obvious but, provided interest rates remain at current levels, the Group’s cash flow over the next few years could be improved by as much as £5,000 per day compared to what it would have been if the swaps had remained in place.’
Sir Miles, who was the island’s first chief minister, says: ‘It may seem to shareholders tht progress is slow and I am repeating many of the messages contained in my first statement when I took over as chairman in June 2010.
‘Unfortunately the road to full recovery was bound to be long given the profound changes in the Group’s structure that were essential following the unprecendented downturn in the general economic environment and the group’s vulnerabilities to that downturn.’
Mr Martin told the Examiner: ‘The chairman says in the report that he is proud to be chairman and I’m equally proud to be chief executive.
‘People have their ups and downs and the amount of work people put in here is tremendous, and they are a great bunch of people to work with. I think they rise to the challenge. We have had challenging times, there’s no pretending we haven’t.’
Asked about the situation he said: ‘Well I think we have made a lot of progress but we have some way to go yet. The next six to nine months is a pivotal time for us.
‘I would love to go into next summer with the group in a fully restructured format; however life is not always that simple and we may not achieve that but we will work as hard as we can to do that.
‘I think the next six to nine months will be a key time for us.’
Around 300 people work for the group.
Mr Martin said in his opinion that reducing the overall debt by £40 million in two years was ‘something we should be proud of. And we are talking about one- and- a-half million pounds of debt a month being expunged.’
Mr Martin said: ‘To some extent we are a national asset really. The hotels and the services we provide are key to the Isle of Man.
‘There’s a pivotal and important relationship between Isle of Man plc and the Sefton Group.
‘We provide by far the larger part of four star hotel accommodation, in terms of the biggest number of rooms overall, the biggest casino operator, the biggest nightclub, the biggest health club and the biggest cinema so I feel that the underlying business is a sound one.
‘What we have to do is get rid of all the fat that accumulated and get back to that core focus of hotel and leisure.
‘As long as we do that we will be a successful group.’
Another key to that is to tap more into the local market, said Mr Martin who added: ‘The key thing to do is to get back to what we do best, clear the decks and get away from all the baggage we have collected and just focus on being good hoteliers.
‘One of the things I think that perhaps we have not focused on so well in recent years has been the local market.
‘The local market is key to our plans going forward.
‘I think there’s a long way travelled and a fair distance to go before we get to where we want to be.’
• Referring to the Castle Mona site he said the former hotel was still on the market.
He said: ‘Our position is that it does not lend itself to being a hotel. I know that is a controversial thing to say.
‘Effectively it’s really a small stately home or a mansion with a hotel attached to it.’
Mr Martin said in his opinion the Castle Mona’s future possibly lay in ‘something other than hotel or leisure.’
‘I could see it as a fabulous corporate headquarters.,’ he said.
‘The Manx Educational Foundation are still very interested in it. It’s a fantastic building.’
But Mr Martin said the Sefton Group was open to offers for the building. ‘We don’t want to stand in the way of it being used for something that will bring it to be brought back to life.’
• The Sefton Group is seeking to recover thousands of pounds from former executive chairman Graham Ferguson Lacey.
The report reveals in July last year the group obtained judgment with execution against Mr Lacey and steps have commenced to recover the amounts owed.
It says trade debtor balances due to Sefton Group total £261,175.
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