Changes are happening at MacDonald’s, quite what we can’t be certain, but what we can be certain of are the following. We reported recently that MacDonald had placed their resort Plas Talgarth on the market. Originally Knight Frank, the selling agents, had the property listed with offers in excess of £5.5m, on checking recently we see the price has been reduced to offers in excess of £4,750,000, a drop of £750,000.
What else we know is that on 1st May this year the company registered office address changed from 1 Exchange Crescent, Conference Square, Edinburgh, EH3 8UL to C/O Shepherd & Wedderburn Llp, 9 Haymarket Square, Edinburgh, EH3 8FY. For those not in the know, Shepherd & Wedderburn is a leading Scottish headquartered UK law firm, with offices in Edinburgh, Glasgow, Aberdeen, London and Dublin. No doubt this law firm are appointed as the corporate lawyers for MacDonald but isn’t it rather odd that the head office of a hospitality company is changed to their lawyers? We also know that at the time of writing, the last accounts published for MacDonald were presented to Companies House on 30th September 2021, no sign of the 2022 accounts yet. The accounting period ending in October 2020 showed a loss of £8,414,000. The results for the following year ending on 30th September 2021 were marginally better showing a profit of £116,000. It may be said that £1 of profit is a lot better than £1 of loss, but for a hospitality business the size of MacDonald Resorts, £116,000 profit is hardly a cause to get the Champagne corks popping.
Increased borrowings
It’s virtually unheard of in the world of commerce that corporations never go cap in hand to lenders, of course they do. Companies may be asset rich but cash poor, remember the old adage:
“Profit is sanity, turnover is vanity, cash flow is king”
For any company to survive there is a need for positive cash flow. Clawing back from an £8.4m loss to a £116,000 profit is great news but it certainly doesn’t point to a very positive cash flow. During our research we noticed that shortly after the MacDonald head office change of address there were two “Registration of charge” notices placed with Companies House both on 11th May 2023 with “Alterations to floating charge” submitted on 17th May 2023, so what is a Registration of charge?
A charge, or mortgage, refers to the rights a company gives to a lender in return for a loan. The rights are often in the form of security given over a company asset or group of assets. Almost all charges should be registered with Companies House, in this case they are.
Put simply, various MacDonald entities have registered security in order to be able to borrow funds for the benefit of the business, at the time of writing the sums involved are unknown but will inevitably show up in future accounts.
TCA comment
It’s true that MacDonald Resorts are a true hospitality company, for sure you don’t have to be a timeshare owner to book holidays at their resorts, that said, timeshare figures heavily in their corporate results. As we have reported in the past, timeshare in Europe is in decline and that’s even more noticeable in the UK.
Only a couple of weeks ago we reported on Trenython Manor, a Club la Costa/Wyndham resort being placed on the market. Plas Talgarth was placed on the market some time before, is this a sign of the times? The answer is probably yes.
The age demographic of UK timeshare owners is much older than other country destinations. Countless current owners purchased many years ago but with advancing years, health issues, financial issues etc, the lustre of timeshare ownership has long gone. Factor in that the sale of new timeshares are virtually nonexistent you may be able to see why the rot is setting in. Younger travellers nowadays explore all the new ways to holiday and timeshare ownership doesn’t even get considered. Add all this together then it becomes easy to see why MacDonald have taken the action they have.
Cash flow will certainly assist in the short term but longer term the timeshare product will need a serious overhaul otherwise its simply throwing good money after bad.
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk