595m pounds Whitbread write-down: Collapse in pub and hotel values reflected in brewer's new property figures

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The Independent Online
WHITBREAD, the fourth-largest brewing company in the UK, has written down the value of its extensive property portfolio by pounds 595m.

The write-down reflects the collapse in pub and hotel prices since Whitbread revalued its properties upwards by close to pounds 1bn at the peak of the market in 1989.

Net assets per share were brought down by 120p to 442p, although the fall was partially mitigated by a cut in net debt from pounds 453.3m to pounds 399.5m over the financial year to 27 February.

Whitbread announced the write- down yesterday with results for 1992/3 showing a 13 per cent rise in taxable profits from pounds 22m to pounds 251m, in line with analysts' forecasts.

However, if the new FRS3 accounting standard had been in force profits would have been pounds 177m, up from pounds 118.6m. The difference between the figures mainly reflects the change in accounting for disposals.

Divisional results were mixed. Brewing felt the impact of strong competition in the second half, with a 4 per cent improvement in trading profits to pounds 70m for the whole year.

The managed retail estate, the biggest operation, returned sharply higher profits of pounds 136m against pounds 120m, bolstered by growing food sales in pubs. There were also benefits from the completion of merging the acquired Peter Dominic off-licences with the Thresher chain.

The overall results prompted a minor adjustment of analysts' forecasts for 1993/4 of pounds 3m- pounds 4m in either direction, giving a consensus estimate of about pounds 240m pre-tax. Whitbread's 'A' shares, on which a 17.75p dividend is being paid, firmed 1p to 482p.

Despite the predictability of the results, there was speculation in some parts of the City that Whitbread was trying to buy about 40 of the 79 Harvester outlets owned by Forte, the hotels group. The Harvesters would complement the company's Brewers Fayre and Beefeater pub-cum-restaurant businesses. Most are in Whitbread's South-east heartland.

Whitbread declined to comment on the rumours. However, there were several hints in the trading report that acquisitions had a big role to play in the company's development.

Sir Michael Angus, chairman, said: 'In recent times we have added scale through acquisitions, and the future lies in further development of acquisitions and geographical expansion.'

Despite the property write-down, Whitbread's debt equates to less than 20 per cent of shareholders' funds of pounds 2.1bn. The company also generated net cash of pounds 57m in 1992/3 in contrast to a total outflow of pounds 282m over the previous two years.

(Photograph and graph omitted)

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