Profits down at Greenalls after disposals
Greenalls Group today reported pre-tax profits down 36% to £101m for the financial year ended 24 September 1999.
The drop reflects a series of disposals during the year. Greenalls sold its tenanted pubs division last December for £370m and its fruit machine business for £23m in March.
After the end of the financial year, it sold its pubs and restaurants division to Scottish & Newcastle for £1.14b in cash.
But even stripping out the disposals, operating profit from continuing operations fell from £55.1m to £41m. This was despite turnover up 2.8% to £418m.
Greenalls said the fall was entirely due to the £3.2m operating loss made by its drinks wholesaling division, Tavern.
In its hotels and leisure business, sales were up 8.5% to £179.2m and operating profit up 4.2% to £48m.
Trading at the 17-strong De Vere hotel chain was "satisfactory", said Greenalls. It generated operating profit of £33.5m, the same as last year.
Profit growth had been hit by a major renovation and expansion programme at its 140-bedroom Daresbury Park hotel in Cheshire and another at the 324-bedroom Belfry hotel in the West Midlands.
Like-for-like room yield improved by 1.3% to £57. Achieved room rate in comparable hotels fell slightly to £76, while occupancy rose by 1.5 percentage points.
But De Vere's performance was still better than that of its provincial four- and five-star competitors, Greenalls claimed.
In the current financial year, it plans a capital investment programme of £27m in De Vere, including £18m for the expansion and development of existing hotels. This compares with total expenditure of £64.4m for 1998/99.
The 10 Village Leisure hotels made an operating profit of £14.3m, a 4.4% increase for comparable hotels and a 13.3% increase overall, including the Village Cardiff which opened at the end of July 1998.
Room yield improved by 4.5% to £39 for comparable hotels, and by 3.6% overall. Achieved room rate in comparable hotels rose by 3.9% to £48, while occupancy remained at 83%.
Greenalls plans to invest £19m in Village Leisure this year, including £17m to build new hotels.
Greenalls is making several management changes "to reflect the new size and shape of the group". Group finance director Alan Rothwell will leave at the end of December, to be replaced by Roger Stubbs, currently finance director for hotels and leisure.
Paul Dermody, managing director of hotels and leisure, has been appointed chief executive. He will take over from Lord Daresbury after the company's annual general meeting.
Daresbury moves to non-executive chairman.
